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250715.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Tuesday, July 15, 2025, Vol. 26, No. 140 Headlines B E L G I U M CEG NV: Fitch Hikes LongTerm IDR to 'BB', Outlook Stable F R A N C E DELACHAUX GROUP: S&P Affirms 'B+' ICR, Outlook Stable HOMEVI SAS: S&P Upgrades Long-Term ICR to 'B', Outlook Stable I R E L A N D BARINGS EURO 2023-2: Fitch Assigns 'B-(EXP)sf' Rating on F-R Notes CARLYLE EURO 2013-1: Moody's Affirms B3 Rating on Class E-R Notes CARLYLE EURO 2025-1: Fitch Assigns 'B-sf' Rating on Class E Notes CROSS OCEAN VIII: S&P Assigns Prelim B- (sf) Rating to F-R Notes HARVEST CLO XXXI: Fitch Assigns 'B-(EXP)sf' Rating on Cl. F-R Notes HARVEST CLO XXXI: S&P Puts Prelim B- (sf) Rating to Cl. F-R Notes JANS OFFSITE: Creditors Meeting Set for July 24 L U X E M B O U R G BANQUE HAVILLAND: Suspension of Payments Regime Ends MAXAM PRILL: Fitch Rates EUR & USD Secured Notes Due 2030 'B+' MAXAM PRILL: S&P Rates Proposed Notes 'B+', Outlook Stable M A L T A FIMBANK PLC: Fitch Hikes LongTerm IDR to 'B+', Outlook Stable N E T H E R L A N D S NOBIAN HOLDING 2: Fitch Affirms & Withdraws 'B' IDR, Stable Outlook SIGNATURE FOODS: S&P Downgrades ICR to 'B-', Outlook Stable R U S S I A [] Fitch Hikes IDRs on 4 Natural Resource Uzbek Corporates to 'BB' S P A I N DORNA SPORTS: S&P Assigns 'BB' Long-Term ICR, Outlook Stable T U R K E Y ALTERNATIFBANK AS: Fitch Affirms BB- LongTerm IDRs, Outlook Stable ARAP TURK: Fitch Affirms 'B' LongTerm IDRs, Outlook Positive BURGAN BANK: Fitch Affirms 'BB-' LongTerm IDRs, Outlook Stable IZMIR METROPOLITAN: Fitch Affirms BB- Long-Term IDR, Outlook Stable MANISA METROPOLITAN: Fitch Affirms BB- LongTerm IDR, Outlook Stable MERSIN METROPOLITAN: Fitch Affirms BB- LongTerm IDR, Outlook Stable MUGLA METROPOLITAN: Fitch Affirms BB- Long-Term IDR, Outlook Stable ODEA BANK: Fitch Affirms 'BB-' Long-Term IDR, Outlook Stable TURKLAND BANK: Fitch Affirms 'B' Long-Term IDR, Outlook Stable U N I T E D K I N G D O M COORDINATE SAAS: Begbies Traynor Named as Administrators DOLFIN FINANCIAL: Oct. 27 Hearing Set for Client Money Distribution PREFERRED RESIDENTIAL: Fitch Affirms 'B-sf' Rating on Cl. E1c Notes R.E. DICKIE: FRP Advisory Named as Administrators ZENITH INTERNATIONAL: August 30 Claims Filing Deadline Set - - - - - ============= B E L G I U M ============= CEG NV: Fitch Hikes LongTerm IDR to 'BB', Outlook Stable -------------------------------------------------------- Fitch Ratings has upgraded bank holding company CEG N.V.'s (CEG) and its fully owned bank subsidiary Nexent Bank N.V.'s (NXB) Long-Term Issuer Default Ratings (IDRs) to 'BB' from 'BB-'. The Outlooks are Stable. Fitch has also upgraded CEG's and NXB's Viability Ratings (VRs) to 'bb' from 'bb-'. The upgrades reflect NXB's strengthened business profile and better asset quality, which support the bank's structural profitability improvement. Key Rating Drivers Prudent Balance-Sheet Management: NXB's established franchise in commodity trade finance is a rating strength, despite its limited diversification. The ratings reflect overall improvements in the bank's credit fundamentals. Since 2018, NXB has been de-risking its balance sheet by reducing its volume of impaired loans and exposure to some emerging countries, which improved its profitability. This has fed through to increased internal capital generation and higher capitalisation. Resilient Performance Despite Geopolitical Tensions: Fitch expects a slowdown in world trade in 2025 from mounting geopolitical tensions, protectionist policies and trade disputes. However, Fitch believes that the performance of European trade finance banks Fitch rates will remain resilient in this context and potentially rebound from 2026, assuming tensions ease. Niche Trade Finance Bank: NXB has a niche trade finance franchise, with diversification into corporate lending and in retail banking in Romania. The volatility of its revenue has decreased over the past years, alongside its exposure to emerging countries. The business profile benefits from NXB's growth strategy in its main franchises, with a controlled risk appetite and improved cost efficiency. Tightened Risk Appetite: The bank has adopted a more conservative risk approach over the past five years by reducing its exposure to cyclical sectors, countries affected by high volatility (e.g. Turkiye), or significant geopolitical developments (e.g. Russia). These measures led to a significant decline in NXB's non-performing exposures and minimum capital requirements. Low NPAs; Adequate Coverage: NXB has recently demonstrated satisfactory balance sheet management, although exposure to emerging markets add potential volatility to asset quality. The non-performing assets (NPA) ratio (which includes on- and off-balance sheet risks, and is a better indicator of the bank's asset quality) gradually declined to about 1% at end-2024, down from 7% at end-2020, helped by tightened underwriting policies, balance sheet de-risking and lending geared towards developed markets. Coverage of impaired loans by provisions remains adequate, at about 60% at end-2024. Fitch expects the NPA ratio to remain at this level in 2025-2026. Improved Profitability: Since 2023, NXB's core profitability has materially improved, thanks to the increase in net interest income and lower loan impairment charges. Fitch expects the bank to maintain an operating profit/risk-weighted assets (RWAs) ratio of above 2% in 2025, despite decreasing interest rates and lower-than-expected trade volumes, on tight cost management and low loan impairment charges. Capital Buffers Improving: NXB's common equity Tier 1 (CET1) ratio has consistently exceeded 15% over the past few years and capital encumbrance by unreserved non-performing exposures has materially reduced. The bank's capital size remains modest in nominal terms, but its capital buffers have recently improved, following the local regulator's decision to reduce its minimum capital requirements. Moderately Stable Deposit Franchise: NXB is mainly funded through granular retail deposits, which are collected online mostly in Germany and the Netherlands. Corporate and interbank deposits are originated from NXB's trade-finance and corporate-banking operations. The bank has a large liquidity buffer, made of central banks' deposits and sovereign bonds. The short-term nature of its balance sheet supports its capacity to meet its commitments. CEG's IDRs Equalised with NXB's: CEG is the parent holding company of NXB, the group's main operating company and core bank. Their ratings are equalised, as there is low double leverage at holding company level and as Fitch believes that the risk of failure of the two entities is substantially the same. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade The bank retains sizeable rating headroom. However, the ratings would be downgraded if the macroeconomic environment weakens more than Fitch expects, leading to a material asset-quality deterioration leading to a NPA ratio of above 3% on a sustained basis, weaker operating profitability (operating profit falling below 1% of RWAs on a sustained basis) or capital position (CET1 ratio below 13%). Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade The ratings could be upgraded on further evidence that NXB's conservative risk profile allows it to generate sound risk-adjusted returns with an operating profit sustainably above 2% of RWAs through the cycle, while maintaining a CET1 ratio materially above 14%. An upgrade would also require a stable risk profile, evidenced by a NPA ratio sustainably below 2%. Tested access to wholesale funding would also be rating positive. NXB's Government Support Rating (GSR) of 'no support' reflects Fitch's view that although external extraordinary government support is possible, it cannot be relied upon. Senior creditors can no longer expect to receive full extraordinary support from the sovereign in the event the bank becomes non-viable. This is because the EU's Bank Recovery and Resolution Directive and the Single Resolution Mechanism for eurozone banks provide a framework for resolving banks that requires senior creditors participating in losses, if necessary, instead of, or ahead of, a bank receiving sovereign support. An upgrade of the GSR would be contingent on a positive change in the sovereign's propensity to support the bank. In Fitch's view, this is highly unlikely, although not impossible. VR ADJUSTMENTS The operating environment score of 'bbb' is below the category implied score of 'aa' due to the following adjustment reason: geographical scope (negative). The earnings & profitability score of 'bb' is below the category implied score of 'bbb' due to the following adjustment reason: revenue diversification (negative). The capitalisation & leverage score of 'bb+' is below the category implied score of 'bbb' due to the following adjustment reason: risk profile and business model (negative). The funding & liquidity score of 'bb' is below the category implied score of 'bbb' due to the following adjustment reason: non-deposit funding (negative). ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Prior ----------- ------ ----- Credit Europe Bank N.V. LT IDR BB Upgrade BB- ST IDR B Affirmed B Viability bb Upgrade bb- Government Support ns Affirmed ns Credit Europe Group N.V. LT IDR BB Upgrade BB- ST IDR B Affirmed B Viability bb Upgrade bb- Government Support ns Affirmed ns =========== F R A N C E =========== DELACHAUX GROUP: S&P Affirms 'B+' ICR, Outlook Stable ----------------------------------------------------- S&P Global Ratings affirmed its ratings on Delachaux Group SAS, including its 'B+' long-term issuer credit rating. The stable outlook reflects S&P's view that the group's overall credit quality will remain unchanged over the next 12-18 months as it expectd S&P Global Ratings-adjusted debt to EBITDA to stay comfortably below 5x (without preferred shares) or 6x (including preferred shares). The affirmation follows the announcement that Delachaux has reached a definitive agreement to sell its sensor technology division Frauscher to Wabtec. Delachaux intends to dispose its Frauscher division to Wabtec with an enterprise valuation of EUR675 million in an all-cash deal, as per the terms and conditions announced on July 7. At this stage, it is unclear how the proceeds will be allocated. S&P said, "We understand that the prepayment clause in the event of the receipt of net cash proceeds set by the documents governing the term loan B (TLB) might be not triggered, however we don't rule out some debt repayment as part of the transaction. Nevertheless, we expect in the short term, the Delachaux family will prioritize the partial or full buyback of the stake of the business owned by Canadian pension fund CPDQ, which amounted to 43.02% as of June 2025. All factors considered, we expect that the group will continue to a leverage target commensurate with a 'B+' rating level, meaning that our debt to EBITDA should continue to stay below 6x (including preference shares)." S&P said, "We expect the group profitability and business scale to decrease as result of the asset disposal. Delachaux acquired Austria-based Frauscher in early 2019 with the support of shareholders via equity contribution and via a EUR160 million incremental facility for an enterprise value of about EUR230 million. The business unit has been historically more profitable than other divisions with an estimated margin well above 20% versus our adjusted EBITDA margin for the whole group of about 16%. As such, if the deal completes, we expect the overall group profitability will reduce toward 14%, while the group topline will shrink by 10%. We acknowledge that the business reduction and the changes in the profitability levels could deteriorate the overall competitive position of the group, leading to higher earnings volatility. "We continue to expect a resilient operating performance for the rest of Delachaux's activities. Despite uncertainty over trade policies and the lack of new large project order intake, we expect Delachaux to benefit from its high share of recurring revenue and some business growth, especially from the group's activities in India over 2025-2026. Liquidity remains high, as the group has full access to its EUR75 million revolving credit facility and there are no upcoming material maturities until 2029 when the TLB is due. "Use of the proceeds, future capital structure, and ownership structure remain somewhat unclear. We understand that with the successful disposal of Frauscher, Delachaux is highly likely to change its ownership structure, with a potential full exit of CDPQ. We expect to have full transparency on the future capital structure and ownership structure by the time the sale closes--by the end of the year, or by latest early 2026--pending the foreign direct investment and antitrust approval processes. The outcome of the negotiations among the key shareholders and use of proceeds could lead to a rating action. However, the company maintains some headroom under the current rating and we do not currently expect a material change in financial policy, so it is likely that ratings will be unchanged. "The stable outlook reflects our view that Delachaux will continue exhibiting resilient operating performance in 2025-2026 despite a reduction in the business perimeter and slightly lower profitability thanks to a focus on more profitable projects and higher investments in the growth of the remaining business divisions. We further expect no material change in earnings and cash flow volatility. Despite uncertainty over the allocation of the proceeds and the potential exit of CDPQ, we expect debt to EBITDA (without preferred shares) to continue to stay below 5x (including preferred shares below 6x), commensurate with a conservative financial policy, and we expect free operating cash flow (FOCF) to stay positive. "We could lower the ratings if Delachaux's EBITDA margin trended below 14%, FOCF dropped below EUR30 million, and funds from operations (FFO) cash interest coverage weakened to less than 2.5x with no near-term recovery prospects. Significant debt-funded shareholders distributions linked to the full or partial exit of CDPQ could also trigger a downgrade if debt to EBITDA increases above 6x. We could also lower the rating if Delachaux's financial policy becomes more aggressive. Further rating pressure could arise if the remaining operations display a notably higher earnings and cash flow volatility. "We consider a positive rating action unlikely, reflecting the future reduction in business perimeter and lower profitability of the business on a stand-alone basis. However, we could raise the rating if Delachaux continues to reduce leverage such that debt to EBITDA is below 5x or debt to EBITDA (without preferred shares) is sustainably below 4x. This could happen if the company were to prioritize the use of the asset disposal toward debt repayment above the exit of CDPQ." An upgrade would also hinge on positive industry trends and robust operating performance, with Delachaux posting meaningful FOCF and FFO to debt above 12%. At the same time, a change in the shareholder structure, alongside a clear financial policy framework, could also lead S&P to review the financial sponsor nature of the business that could translate into upside pressures to the ratings. HOMEVI SAS: S&P Upgrades Long-Term ICR to 'B', Outlook Stable ------------------------------------------------------------- S&P Global Ratings raised its long-term issuer credit rating on France-based nursing home operator HomeVi SAS to 'B' from 'B-' and raised its issue rating on the term loan B to 'B' from 'B-'. The stable outlook reflects S&P's view that HomeVi's operating performance and credit metrics will remain resilient, with adjusted debt to EBITDA below 7.0x and positive FOCF after leases. The upgrade reflects S&P's expectation that HomeVi's continuous improvement of its credit metrics in 2024 will continue in 2025, with adjusted leverage decreasing below 7.0x. In 2024, HomeVi achieved EUR2.6 billion in revenue, marking a 7.0% increase from the previous year. This growth was primarily organic, driven by rising average daily rates due to regulated accommodation price increases in France set at 5.48%, geographic diversification, and the continuous ramp-up of newly opened facilities. The group also saw occupancy rates rise to 93.3% from 92.4% the previous year. While HomeVi's adjusted EBITDAR grew to approximately EUR554.6 million, the EBITDAR margin remained steady at about 21.1%, indicating that rising staffing and operational costs are partly offsetting the positive momentum. Notably, adjusted debt to EBITDA improved significantly to 7.5x in 2024 from 8.1x in 2023, thanks to EBITDA growth and a slight reduction in debt. In turn, HomeVi's fixed-charge coverage remained at about 1.4x and FOCF after leases and before sale-and-leaseback financing improved, despite remaining negative by about EUR37.8 million. In the first quarter of 2025, HomeVi maintained its resilient performance, reporting revenues of EUR669 million--up 3.7% year on year--and EBITDAR of around EUR139 million, which remained stable compared to the previous period. This top-line growth continues to benefit from a price revaluation across regions and an increase in bed capacity. S&P said, "We expect these price effects, together with new greenfield site openings and effective cost management, to sustain margins despite rising costs, notably for energy and staffing. Over the next 12-18 months, we anticipate that leverage will decrease below 7.0x and the fixed-charge coverage ratio will rise to approximately 1.5x-1.7x, bolstered by EBITDA. Overall, we believe that HomeVi will continue to deleverage, albeit at a more measured pace." S&P said, "We anticipate that HomeVi will continue expanding its earnings base through organic investments and gradually improve its profitability over the next 12-18 months. This will lead to adjusted leverage decreasing to between 6.0x and 7.0x from 8.1x in 2023. We project that HomeVi's revenues will grow by 7.0%-10.0% due to favorable pricing dynamics that will elevate average daily rates across regions, particularly benefiting from France's 3.21% revaluation index for 2025. We also foresee ongoing improvements in occupancy rates as HomeVi works to restore them to pre-pandemic levels and capitalizes on the ramp-up of recently opened facilities. Additionally, upcoming greenfield site openings, notably in Spain and other geographies, will contribute to revenue growth and increase bed capacity over the next few years. HomeVi's strategic investments in various greenfield sites and relocation projects in key locations will further enhance its bed offering and bolster its geographic diversification and revenue potential. "We anticipate adjusted EBITDA of EUR625 million-EUR635 million in 2025 and EUR650 million-EUR660 million in 2026. This will result in a margin of 21.5%-22.0% against approximately EUR4.2 billion in adjusted debt, which includes gross debt, lease liabilities, factoring-line utilization, and put options for minority shareholders. Given HomeVi's financial-sponsor ownership, we do not net cash from gross debt, and our EBITDA calculation excludes one-off items. We expect the adjusted EBITDA margin to improve due to ongoing cost-saving initiatives, including rental negotiations and tight management of food, energy, and cleaning costs. This will help manage costs amid inflationary pressure on rents and salaries. "We expect HomeVi's FOCF after leases to break even in 2025 and turn positive thereafter, supporting its deleveraging efforts. HomeVi's high capital expenditure (capex) and increasing leases stem from its investment capex. We project that capex will remain between EUR140 million and EUR150 million this year, before declining to around EUR90 million by 2027." These investments will support greenfield projects in Spain and other regions. HomeVi plans to open about 10 facilities in 2025 and another 10 subsequently, but also relocate some facilities, notably in France. Sale-and-leaseback transactions will enhance HomeVi's capex investments, bolstering its future margin generation. Our forecast also factors in annual working capital requirements of about EUR5 million, reflecting relatively stable working capital in France, but some intra-year volatility in Spain, especially in the homecare segment. S&P said, "Additionally, we expect overall cash interest payments to range from EUR200 million to EUR215 million over the next 12-18 months, as the group is well-protected against interest rate fluctuations, with 100% of its term loan B hedged until 2026. Therefore, we assume breakeven FOCF after lease payments and before sale-and-leaseback financing of about negative EUR0 million-EUR5 million in 2025, followed by a rebound to positive EUR25 million-EUR35 million in 2026 as high capex starts to ease and the group benefits from a full hedge on its debt." S&P said, "We think that HomeVi will likely continue to increase the scale of its operations organically and improve its earnings quality while maintaining debt to EBITDA below 7.0x, commensurate with the ‘B' rating. We believe that HomeVi will successfully expand its revenue base through new greenfield projects, notably in Spain, the Netherlands, and Germany. While there are risks associated with these new facilities achieving the occupancy rates necessary for sustained revenue growth, we are optimistic that increasing demand and the sector's bed shortage will enhance the appeal of HomeVi's offerings and drive occupancy rates higher." HomeVi's specialization in private housing, services, and care for the elderly sets it apart from competitors and gives it a competitive edge. S&P said, "Although the sector still faces significant staffing shortages, leading to a reliance on more expensive temporary workers, we are confident that HomeVi can navigate these challenges. Also, as inflation eases, we see a risk to HomeVi's ability to reprice further because of high competitiveness and tariff regulation in some regions. This puts HomeVi in a good position to potentially execute further greenfield investments over 2025-2027 while maintaining its leverage below 7.0x. We understand that the group's growth strategy is mostly organic, which removes the risk associated with mergers and acquisitions." S&P said, "The stable outlook reflects our view that HomeVi's adjusted debt leverage will improve to below 7x in 2025 and remain below 7x thereafter. We foresee the group's FOCF after leases being close to breakeven this year and improving further in 2026. We also see profitability slightly improving with the ramp-up of new facilities on greenfield sites and the easing of inflation. "We could lower the rating if HomeVi's performance deviates from our current expectations for 2025 and 2026, leading to adjusted debt leverage increasing above 7.0x and the fixed-charge coverage ratio falling below 1.5x. This could occur if HomeVi's operating performance deteriorates well below our base-case projections due to weaker industry key performance indicators--such as occupancy rates and fees--that pressurize margins, together with operating-cost inflation given the high fixed-cost base. It could also occur if the group pursues additional debt-financed acquisitions or is unable to generate positive FOCF after leases, preventing deleveraging." S&P considers a positive rating action unlikely over the next 12 months because it projects that HomeVi's credit metrics will likely remain commensurate with a highly leveraged financial risk profile. However, S&P could raise the rating if: -- HomeVi's profitability and FOCF after leases are materially above S&P's base case; -- HomeVi uses internally generated cash to reduce adjusted debt to EBITDA sustainably below 5.0x and commits to maintain the ratio at this level; -- HomeVi maintains a conservative financial policy; and -- Fixed-charge coverage stabilizes at or above 2.2x. S&P thinks this is unlikely as the industry continues to return to pre-pandemic performance levels. ============= I R E L A N D ============= BARINGS EURO 2023-2: Fitch Assigns 'B-(EXP)sf' Rating on F-R Notes ------------------------------------------------------------------ Fitch Ratings has assigned Barings Euro CLO 2023-2 DAC expected ratings. Entity/Debt Rating ----------- ------ Barings Euro CLO 2023-2 DAC A-R LT AAA(EXP)sf Expected Rating B-1R LT AA(EXP)sf Expected Rating B-2R LT AA(EXP)sf Expected Rating C-R LT A(EXP)sf Expected Rating D-R LT BBB-(EXP)sf Expected Rating E-R LT BB-(EXP)sf Expected Rating F-R LT B-(EXP)sf Expected Rating Transaction Summary Barings Euro CLO 2023-2 DAC is a securitisation of mainly senior secured obligations (at least 90%) with a component of senior unsecured, mezzanine and second-lien loans and high-yield bonds. On the issue date, the existing notes except for the subordinated notes will be refinanced. The portfolio is actively managed by Barings (U.K.) Limited. The collateralised loan obligation (CLO) has a 4.5-year reinvestment period and an 8.5-year weighted average life test (WAL) at closing. KEY RATING DRIVERS Average Portfolio Credit Quality (Neutral): Fitch assesses the average credit quality of obligors at 'B'/'B-'. The Fitch-weighted average rating factor (WARF) of the identified portfolio is 23.4. High Recovery Expectations (Positive): At least 90% of the portfolio comprises senior secured obligations. The recovery prospects for these assets are more favourable than for second-lien, unsecured and mezzanine assets. The Fitch-weighted average recovery rate of the identified portfolio is 63.6%. Diversified Asset Portfolio (Positive): The transaction has a concentration limit for the 10 largest obligors at 20%. The deal also includes other concentration limits, including a maximum exposure of 40% to the three largest Fitch-defined industries in the portfolio. These covenants ensure the portfolio will not be excessively concentrated. Portfolio Management (Neutral): The deal has a reinvestment period of about 4.5 years and includes reinvestment criteria similar to those of other European transactions. Fitch's analysis is based on a stressed-case portfolio, with the aim of testing the robustness of the deal structure against its covenants and portfolio guidelines. Cash-flow Modelling (Positive): The WAL for the transaction's Fitch-stressed portfolio analysis is 12 months less than the WAL covenant. This is to account for the strict reinvestment conditions envisaged after the reinvestment period. These include passing the coverage tests and Fitch 'CCC' limit after the reinvestment period, and a WAL covenant that progressively steps down, before and after the end of the reinvestment period. These conditions would reduce the effective risk horizon of the portfolio during periods of stress. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade An increase of the default rate (RDR) by 25% of the mean RDR and a decrease of the recovery rate (RRR) by 25% at all rating levels in the current portfolio would have no impact on the class A-R notes, but would lead to downgrades of up to one notch for the class E-R notes and to below 'B-sf' for the class F-R notes. Downgrades may occur if the build-up of the notes' credit enhancement following amortisation does not compensate for a larger loss expectation than initially assumed due to unexpectedly high levels of defaults and portfolio deterioration. Due to the better metrics and shorter life of the current portfolio than the Fitch-stressed portfolio, the class B-R, D-R, E-R and F-R notes have a rating cushion of two notches, and the class C-R notes have a cushion of three notches. Should the cushion between the current portfolio and the Fitch-stressed portfolio be eroded, either due to manager trading or negative portfolio credit migration, a 25% increase of the mean RDR and a 25% decrease of the RRR across all ratings of the Fitch-stressed portfolio would lead to downgrades of four notches for the class B-1-R to C-R debt, three notches for the class A-R and class D-R notes, and to below 'B-sf' for the class E-R and F-R notes. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade A reduction of the RDR by 25% of the mean RDR and an increase in the RRR by 25% at all rating levels in the Fitch-stressed portfolio would result in upgrades of up to three notches for all notes, except for the 'AAAsf' rated notes, which are at the highest level on Fitch's scale and cannot be upgraded. Upgrades during the reinvestment period, which are based on the Fitch-stressed portfolio, may occur on better-than-expected portfolio credit quality and a shorter remaining WAL test, allowing the notes to withstand larger-than-expected losses for the remaining life of the transaction. Upgrades after the end of the reinvestment period may result from stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread available to cover losses in the remaining portfolio. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Barings Euro CLO 2023-2 DAC Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. The majority of the underlying assets or risk presenting entities have ratings or credit opinions from Fitch and/or other Nationally Recognized Statistical Rating Organizations and/or European Securities and Markets Authority registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and/or other rating agencies to assess the asset portfolio information or information on the risk presenting entities. Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG Considerations Fitch does not provide ESG relevance scores for Barings Euro CLO 2023-2 DAC. In cases where Fitch does not provide ESG relevance scores in connection with the credit rating of a transaction, programme, instrument or issuer, Fitch will disclose any ESG factor that is a key rating driver in the key rating drivers section of the relevant rating action commentary. CARLYLE EURO 2013-1: Moody's Affirms B3 Rating on Class E-R Notes ----------------------------------------------------------------- Moody's Ratings has upgraded the ratings on the following notes issued by Carlyle Euro CLO 2013-1 DAC: EUR24,000,000 Class B-R Senior Secured Deferrable Floating Rate Notes due 2030, Upgraded to Aaa (sf); previously on Nov 29, 2024 Upgraded to Aa2 (sf) EUR23,000,000 Class C-R Senior Secured Deferrable Floating Rate Notes due 2030, Upgraded to A2 (sf); previously on Nov 29, 2024 Upgraded to Baa1 (sf) Moody's have also affirmed the ratings on the following notes: EUR236,000,000 (Current outstanding amount EUR64,124,050) Class A-1-R Senior Secured Floating Rate Notes due 2030, Affirmed Aaa (sf); previously on Nov 29, 2024 Affirmed Aaa (sf) EUR56,000,000 Class A-2-R Senior Secured Floating Rate Notes due 2030, Affirmed Aaa (sf); previously on Nov 29, 2024 Affirmed Aaa (sf) EUR20,000,000 Class D-R Senior Secured Deferrable Floating Rate Notes due 2030, Affirmed Ba2 (sf); previously on Nov 29, 2024 Affirmed Ba2 (sf) EUR10,000,000 Class E-R Senior Secured Deferrable Floating Rate Notes due 2030, Affirmed B3 (sf); previously on Nov 29, 2024 Affirmed B3 (sf) Carlyle Euro CLO 2013-1 DAC, issued in June 2013, reset in February 2017 and refinanced in October 2019, is a collateralised loan obligation (CLO) backed by a portfolio of mostly high-yield senior secured European loans. The portfolio is managed by CELF Advisors LLP. The transaction's reinvestment period ended in April 2021. RATINGS RATIONALE The rating upgrades on the Class B-R and C-R notes are primarily a result of the deleveraging of the senior notes following amortisation of the underlying portfolio since the last rating action in November 2024. The affirmations on the ratings on the Class A-1-R, A-2-R, D-R and E-R notes are primarily a result of the expected losses on the notes remaining consistent with their current rating levels, after taking into account the CLO's latest portfolio, its relevant structural features and its actual over-collateralisation ratios. The A-1-R notes have paid down by approximately EUR48.1 million (20.4%) since the last rating action in November 2024 and EUR171.9 (72.8%) since closing. As a result of the deleveraging, over-collateralisation (OC) has increased across the capital structure. According to the trustee report dated May 2025[1] the Class A/B, Class B, Class C, Class D and Class E OC ratios are reported at 176.4%, 147.0%, 126.8%, 113.2% and 107.5% compared to October 2024[2] levels of 150.3%, 133.1%, 120.0%, 110.5% and 106.3%, respectively. Moody's notes that the October 2024 principal payments are not reflected in the reported OC ratios. The key model inputs Moody's uses in Moody's analysis, such as par, weighted average rating factor, diversity score and the weighted average recovery rate, are based on Moody's published methodologies and could differ from the trustee's reported numbers. In Moody's base case, Moody's used the following assumptions: Performing par and principal proceeds balance: EUR211.8 million Defaulted Securities: EUR0 Diversity Score: 35 Weighted Average Rating Factor (WARF): 2962 Weighted Average Life (WAL): 3.0 years Weighted Average Spread (WAS) (before accounting for Euribor/reference rate floors): 3.6% Weighted Average Coupon (WAC): 3.4% Weighted Average Recovery Rate (WARR): 44.19% Par haircut in OC tests and interest diversion test: 0% The default probability derives from the credit quality of the collateral pool and Moody's expectations of the remaining life of the collateral pool. The estimated average recovery rate on future defaults is based primarily on the seniority of the assets in the collateral pool. In each case, historical and market performance and a collateral manager's latitude to trade collateral are also relevant factors. Moody's incorporates these default and recovery characteristics of the collateral pool into Moody's cash flow model analysis, subjecting them to stresses as a function of the target rating of each CLO liability it is analysing. Moody's notes that the June 2025 trustee report was published at the time Moody's were completing Moody's analysis of the May 2025[1] data. Key portfolio metrics such as WARF, diversity score, weighted average spread and life, and OC ratios exhibit little or no change between these dates. Moody's carried out additional analysis that showed the decrease in performing par balance and increase in principal proceeds balance of EUR9.8m had no material impact on the outcome. Methodology Underlying the Rating Action: The principal methodology used in these ratings was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in May 2024. Counterparty Exposure: The rating action took into consideration the notes' exposure to relevant counterparties, such as account bank, using the methodology "Structured Finance Counterparty Risks" published in May 2025. Moody's concluded the ratings of the notes are not constrained by these risks. Factors that would lead to an upgrade or downgrade of the ratings: The rated notes' performance is subject to uncertainty. The notes' performance is sensitive to the performance of the underlying portfolio, which in turn depends on economic and credit conditions that may change. The collateral manager's investment decisions and management of the transaction will also affect the notes' performance. Additional uncertainty about performance is due to the following: -- Portfolio amortisation: The main source of uncertainty in this transaction is the pace of amortisation of the underlying portfolio, which can vary significantly depending on market conditions and have a significant impact on the notes' ratings. Amortisation could accelerate as a consequence of high loan prepayment levels or collateral sales by the collateral manager or be delayed by an increase in loan amend-and-extend restructurings. Fast amortisation would usually benefit the ratings of the notes beginning with the notes having the highest prepayment priority. -- Long-dated assets: The presence of assets that mature beyond the CLO's legal maturity date exposes the deal to liquidation risk on those assets. Moody's assumes that, at transaction maturity, the liquidation value of such an asset will depend on the nature of the asset as well as the extent to which the asset's maturity lags that of the liabilities. Liquidation values higher than Moody's expectations would have a positive impact on the notes' ratings. In addition to the quantitative factors that Moody's explicitly modelled, qualitative factors are part of the rating committee's considerations. These qualitative factors include the structural protections in the transaction, its recent performance given the market environment, the legal environment, specific documentation features, the collateral manager's track record and the potential for selection bias in the portfolio. All information available to rating committees, including macroeconomic forecasts, input from Moody's other analytical groups, market factors, and judgments regarding the nature and severity of credit stress on the transactions, can influence the final rating decision. CARLYLE EURO 2025-1: Fitch Assigns 'B-sf' Rating on Class E Notes ----------------------------------------------------------------- Fitch Ratings has assigned Carlyle Euro CLO 2025-1 DAC notes final ratings. Entity/Debt Rating ----------- ------ Carlyle Euro CLO 2025-1 DAC Class A-1 XS3065225669 LT AAAsf New Rating Class A-2 XS3065226394 LT AAsf New Rating Class B XS3065226717 LT Asf New Rating Class C XS3065227012 LT BBB-sf New Rating Class D XS3065227285 LT BB-sf New Rating Class E XS3065227442 LT B-sf New Rating Subordinated Notes XS3065227798 LT NRsf New Rating Transaction Summary Carlyle Euro CLO 2025-1 DAC is a securitisation of mainly senior secured obligations (at least 90%) with a component of senior unsecured, mezzanine, second-lien loans and high-yield bonds. Note proceeds have been used to purchase a portfolio with a target par of EUR500 million. The portfolio is actively managed by Carlyle CLO Management Europe LLC, which is part of the Carlyle Group. The CLO has a 2.1-year reinvestment period and a six-year weighted average life (WAL) test covenant. KEY RATING DRIVERS Average Portfolio Credit Quality (Neutral): Fitch considers the average credit quality of obligors to be in the 'B'/'B-' category. The Fitch weighted average rating factor of the identified portfolio is 24.7. High Recovery Expectations (Positive): At least 90% of the portfolio comprises senior secured obligations. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The Fitch weighted average recovery rate of the identified portfolio is 60.3%. Diversified Asset Portfolio (Positive): The transaction also includes various other concentration limits, including the maximum exposure to the three largest Fitch-defined industries in the portfolio at 40%. These covenants ensure that the asset portfolio will not be exposed to excessive concentration. Portfolio Management (Neutral): The transaction includes two matrices corresponding to fixed-rate limits of 5% and 10%. Both matrices are effective at closing and are based on a top 10 obligor concentration limit of 20% and a six-year WAL test covenant. The transaction has a 2.1-year reinvestment period and includes reinvestment criteria similar to those of other European transactions. Fitch's analysis is based on a stressed-case portfolio with the aim of testing the robustness of the transaction structure against its covenants and portfolio guidelines. Cash-flow Modelling (Positive): The WAL used for the transaction's stress portfolio analysis is six years, which is in line with the WAL test covenant. Strict reinvestment conditions after the reinvestment period are envisaged in this transaction, including the satisfaction of the coverage tests and the Fitch 'CCC' bucket limitation test post reinvestment, as well as a progressively declining WAL test covenant. However, Fitch would not shorten the modelled risk horizon below six years according to its CLO criteria. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A 25% increase of the mean default rate (RDR) across all ratings and a 25% decrease of the recovery rate (RRR) across all ratings of the current portfolio would have no impact on the class A-1 notes, and lead to downgrades of no more than one notch for the class A-2, C and D notes, no more than two notches for the class B notes, and to below 'B-sf' for the class F notes. Based on the current portfolio, downgrades may occur if the loss expectation is larger than initially assumed, due to unexpectedly high levels of defaults and portfolio deterioration. Due to the better metrics of the current portfolio than the Fitch-stressed portfolio, the class A-2, C, D and E notes have two-notch cushions and the class B notes a one-notch cushion. Should the cushion between the current portfolio and the Fitch-stressed portfolio erode due to manager trading or negative portfolio credit migration, a 25% increase of the mean RDR across all ratings and a 25% decrease of the RRR across all ratings of the Fitch-stressed portfolio would result in downgrades of one notch for the class C notes, three notches for the class A-1 notes, four notches for the class A-2 and B notes, and to below 'B-sf' for the class D and E notes. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade A 25% reduction of the mean RDR across all ratings and a 25% increase in the RRR across all ratings of the Fitch-stressed portfolios would lead to upgrades of no more than three notches for the notes, except for the 'AAAsf' notes, which are at the highest level on Fitch's scale and cannot be upgraded. During the reinvestment period, based on the Fitch-stressed portfolio, upgrades may occur on better-than-expected portfolio credit quality and a shorter remaining WAL test, allowing the notes to withstand larger-than-expected losses for the remaining life of the transaction. After the end of the reinvestment period, upgrades may occur in case of stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread available to cover losses on the remaining portfolio. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY The majority of the underlying assets or risk presenting entities have ratings or credit opinions from Fitch and/or other Nationally Recognized Statistical Rating Organizations and European Securities and Markets Authority registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and other rating agencies to assess the asset portfolio information or information on the risk presenting entities. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG Considerations Fitch does not provide ESG relevance scores for Carlyle Euro CLO 2025-1 DAC. In cases where Fitch does not provide ESG relevance scores in connection with the credit rating of a transaction, programme, instrument or issuer, Fitch will disclose any ESG factor that is a key rating driver in the key rating drivers section of the relevant rating action commentary. CROSS OCEAN VIII: S&P Assigns Prelim B- (sf) Rating to F-R Notes ---------------------------------------------------------------- S&P Global Ratings assigned preliminary credit ratings to Cross Ocean Bosphorus CLO VIII DAC's class A-R to F-R European cash flow CLO notes. At closing, the issuer will have unrated subordinated notes outstanding from the existing transaction and will issue additional subordinated notes. This transaction is a reset of the already existing transaction which S&P did not rate. The existing classes of notes will be fully redeemed with the proceeds from the issuance of the replacement notes on the reset date. The reinvestment period will be approximately five years, while the non-call period will be two years after closing. Under the transaction documents, the rated notes will pay quarterly interest unless there is a frequency switch event. Following this, the notes will switch to semi-annual payment. The preliminary ratings assigned reflect S&P's assessment of: -- The diversified collateral pool, which primarily comprises broadly syndicated speculative-grade senior secured term loans and bonds that are governed by collateral quality tests. -- The credit enhancement provided through the subordination of cash flows, excess spread, and overcollateralization. -- The collateral manager's experienced team, which can affect the performance of the rated notes through collateral selection, ongoing portfolio management, and trading. -- The transaction's legal structure, which S&P expects to be bankruptcy remote. -- The transaction's counterparty risks, which S&P expects to be in line with its counterparty rating framework. Portfolio benchmarks S&P Global Ratings' weighted-average rating factor 2,873.30 Default rate dispersion 496.99 Weighted-average life (years) 4.58 Weighted-average life (years) extended to cover length of the reinvestment period 5.00 Obligor diversity measure 118.92 Industry diversity measure 23.80 Regional diversity measure 1.19 Transaction key metrics Portfolio weighted-average rating derived from S&P's CDO evaluator B 'CCC' category rated assets (%) 2.00 Actual 'AAA' weighted-average recovery (%) 37.11 Actual weighted-average spread (net of floors; %) 4.05 Actual weighted-average coupon 6.28 Rating rationale S&P said, "Our ratings reflect our assessment of the collateral portfolio's credit quality, which has a weighted-average rating of 'B'. We expect the portfolio to be well-diversified on the closing date, primarily comprising broadly syndicated speculative-grade senior secured term loans and bonds. Therefore, we conducted our credit and cash flow analysis by applying our criteria for corporate cash flow CDOs. "In our cash flow analysis, we used the EUR350 million target par amount, the target weighted-average spread (4.05%), the target weighted-average coupon (6.28%), the actual weighted-average recovery rate. We applied various cash flow stress scenarios, using four different default patterns, in conjunction with different interest rate stress scenarios for each liability rating category." Until the end of the reinvestment period in July 2030, the collateral manager may substitute assets in the portfolio for so long as S&P's CDO Monitor test is maintained or improved in relation to the initial ratings on the notes. This test looks at the total amount of losses that the transaction can sustain as established by the initial cash flows for each rating, and it compares that with the current portfolio's default potential plus par losses to date. S&P said, "Under our structured finance sovereign risk criteria, we expect the transaction's exposure to country risk to be sufficiently mitigated at the assigned ratings. "At closing we expect the transaction's documented counterparty replacement and remedy mechanisms to adequately mitigate its exposure to counterparty risk under our current counterparty criteria. "We expect the transaction's legal structure and framework to be bankruptcy remote, in line with our legal criteria. "Following our analysis of the credit, cash flow, counterparty, operational, and legal risks, we believe our preliminary ratings are commensurate with the available credit enhancement for the class A-R to F-R notes. "Our credit and cash flow analysis indicates that the available credit enhancement for the class B-R to E-R notes could withstand stresses commensurate with higher ratings than those we have assigned. However, as the CLO is still in its reinvestment phase, during which the transaction's credit risk profile could deteriorate, we have capped our preliminary ratings assigned to these notes. "In addition to our standard analysis, to provide an indication of how rising pressures among speculative-grade corporates could affect our ratings on European CLO transactions, we have also included the sensitivity of the ratings on the class A-R to E-R notes based on four hypothetical scenarios. "As our ratings analysis makes additional considerations before assigning ratings in the 'CCC' category, and we would assign a 'B-' rating if the criteria for assigning a 'CCC' category rating are not met, we have not included the above scenario analysis results for the class F-R notes." Environmental, social, and governance S&P said, "We regard the exposure to environmental, social, and governance (ESG) credit factors in the transaction as being broadly in line with our benchmark for the sector. Primarily due to the diversity of the assets within CLOs, the exposure to environmental credit factors is viewed as below average, social credit factors are below average, and governance credit factors are average. For this transaction, the documents prohibit or limit assets from being related to certain industries. Since the exclusion of assets from these industries does not result in material differences between the transaction and our ESG benchmark for the sector, no specific adjustments have been made in our rating analysis to account for any ESG-related risks or opportunities." Ratings Prelim Prelim amount Credit Class rating* (mil. EUR) enhancement (%) Interest rate§ A-R AAA (sf) 213.50 39.00 Three/six-month EURIBOR plus 1.38% B-R AA (sf) 42.00 27.00 Three/six-month EURIBOR plus 2.05% C-R A (sf) 21.00 21.00 Three/six-month EURIBOR plus 2.50% D-R BBB- (sf) 24.50 14.00 Three/six-month EURIBOR plus 3.50% E-R BB- (sf) 14.90 9.74 Three/six-month EURIBOR plus 6.17% F-R B- (sf) 11.30 6.51 Three/six-month EURIBOR plus 8.60% Sub. Notes NR 27.66 N/A N/A *The preliminary ratings assigned to the class A-R and B-R notes address timely interest and ultimate principal payments. The ratings assigned to the class C-R, D-R, E-R, and F-R notes address ultimate interest and principal payments. §The payment frequency switches to semiannual and the index switches to six-month EURIBOR when a frequency switch event occurs. EURIBOR--Euro Interbank Offered Rate. NR--Not rated. N/A--Not applicable. HARVEST CLO XXXI: Fitch Assigns 'B-(EXP)sf' Rating on Cl. F-R Notes ------------------------------------------------------------------- Fitch Ratings has assigned the Harvest CLO XXXI DAC reset transaction expected ratings. The assignment of final ratings is contingent on the receipt of final documents conforming to information already reviewed. Entity/Debt Rating ----------- ------ Harvest CLO XXXI DAC Class A-R XS3105230117 LT AAA(EXP)sf Expected Rating Class B-R XS3105230380 LT AA(EXP)sf Expected Rating Class C-R XS3105230547 LT A(EXP)sf Expected Rating Class D-R XS3105230893 LT BBB-(EXP)sf Expected Rating Class E-R XS3105231198 LT BB-(EXP)sf Expected Rating Class F-R XS3105231354 LT B-(EXP)sf Expected Rating Transaction Summary Harvest CLO XXXI DAC is a securitisation of mainly senior secured obligations (at least 90%) with a component of corporate rescue loans, senior unsecured, mezzanine, second-lien loans and high-yield bonds. On the issue date, the existing notes except for the subordinated notes will be refinanced. The portfolio is managed by Investcorp Credit Management EU Limited. The collateralised loan obligation (CLO) has a 4.5-year reinvestment period and a 8.5-year weighted average life (WAL) test covenant. KEY RATING DRIVERS Average Portfolio Credit Quality (Neutral): Fitch Ratings assesses the average credit quality of obligors in the indicative portfolio to be in the 'B'/'B-' category. The Fitch weighted average rating factor (WARF) of the indicative portfolio is 24.7. Strong Recovery Expectation (Positive): At least 90% of the portfolio is expected to comprise of senior secured obligations. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The Fitch weighted average recovery rate (WARR) of the indicative portfolio is 58.4%. Diversified Portfolio (Positive): The exposure to the 10 largest obligors and fixed-rate assets is limited to 20% and 10%, respectively. The transaction also includes various concentration limits, including the maximum exposure to the three largest Fitch-defined industries in the portfolio at 40%. These covenants ensure that the asset portfolio will not be exposed to excessive concentration. Portfolio Management (Neutral): The transaction will have a 4.5-year reinvestment period and include reinvestment criteria similar to those of other European transactions. Fitch's analysis is based on a stressed-case portfolio with the aim of testing the robustness of the transaction structure against its covenants and portfolio guidelines. Cash Flow Modelling (Positive): The WAL used for the transaction stress portfolio and matrices analysis is 12 months less than the WAL test covenant, to account for strict reinvestment conditions after the reinvestment period, including the satisfaction of overcollateralisation (OC) tests and Fitch's 'CCC' limit tests, together with a linearly decreasing WAL test covenant. In the agency's opinion, these conditions reduce the effective risk horizon of the portfolio during stress periods. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A 25% increase of the mean default rate (RDR) across all ratings and a 25% decrease in the recovery rate (RRR) across all the ratings of the current portfolio would have no impact on the class A notes, but would lead to downgrades of one notch for the remaining notes. Downgrades, which are based on the current portfolio, may occur if the loss expectation is larger than initially assumed, due to unexpectedly high levels of defaults and portfolio deterioration. Owing to the better metrics and shorter life of the current portfolio than the stressed-case portfolio, the class B-R to F-R notes display a rating cushion of up to two notches. Should the cushion between the current portfolio and the stressed-case portfolio be eroded either due to manager trading or negative portfolio credit migration, a 25% increase in the mean RDR across all the ratings, and a 25% decrease in the RRR across all the ratings of the stressed-case portfolio, would lead to downgrades of up to four notches for the rated notes. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade A 25% reduction in the RDR across all ratings and a 25% increase in the RRR across all the ratings of the stressed-case portfolio would lead to upgrades of up to three notches for the rated notes, except for the 'AAAsf' rated notes. During the reinvestment period, upgrades, which are based on the stressed-case portfolio, may occur on better-than-expected portfolio credit quality and a shorter remaining WAL test, leading to the ability of the notes to withstand larger-than-expected losses for the remaining life of the transaction. After the end of the reinvestment period, upgrades, except for the 'AAAsf' notes, may occur if there is stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread being available to cover losses in the remaining portfolio. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Harvest CLO XXXI DAC Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. The majority of the underlying assets or risk presenting entities have ratings or credit opinions from Fitch and/or other Nationally Recognized Statistical Rating Organizations and/or European Securities and Markets Authority registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and/or other rating agencies to assess the asset portfolio information or information on the risk presenting entities. Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG Considerations Fitch does not provide ESG relevance scores for Harvest CLO XXXI DAC. In cases where Fitch does not provide ESG relevance scores in connection with the credit rating of a transaction, programme, instrument or issuer, Fitch will disclose any ESG factor that is a key rating driver in the key rating drivers section of the relevant rating action commentary. HARVEST CLO XXXI: S&P Puts Prelim B- (sf) Rating to Cl. F-R Notes ----------------------------------------------------------------- S&P Global Ratings assigned preliminary credit ratings to Harvest CLO XXXI DAC's class A-R, B-R, C-R, D-R, E-R, and F-R notes. At closing, the issuer will have unrated class Z and subordinated notes outstanding from the existing transaction. This transaction is a reset of the already existing transaction. The existing classes of notes will be fully redeemed with the proceeds from the issuance of the replacement notes on the reset date. Under the transaction documents, the rated notes will pay quarterly interest, unless a frequency switch event occurs. Following such an event, the notes will permanently switch to semiannual payments. The portfolio's reinvestment period will end approximately 4.50 years after closing. The non-call period will end approximately 1.5 years after closing. The preliminary ratings reflect S&P's assessment of: -- The diversified collateral pool, which primarily comprises broadly syndicated speculative-grade senior secured term loans and bonds that are governed by collateral quality tests. -- The credit enhancement provided through the subordination of cash flows, excess spread, and overcollateralization. -- The experience of the collateral manager's team, which can affect the performance of the rated notes through collateral selection, ongoing portfolio management, and trading. -- The transaction's legal structure, which S&P expects to be bankruptcy remote. -- The transaction's counterparty risks, which S&P expects to be in line with its counterparty rating framework. Portfolio benchmarks S&P Global Ratings' weighted-average rating factor 2,804.88 Default rate dispersion 573.00 Weighted-average life (years) 4.60 Obligor diversity measure 135.65 Industry diversity measure 23.05 Regional diversity measure 1.23 Transaction key metrics Portfolio weighted-average rating derived from S&P's CDO evaluator B 'CCC' category rated assets (%) 2.55 Target 'AAA' weighted-average recovery (%) 36.57 Target floating-rate assets (%) 95.88 Target weighted-average coupon 4.19 Target weighted-average spread (net of floors; %) 3.84 S&P said, "We understand that the portfolio will be well-diversified at closing. Therefore, we have conducted our credit and cash flow analysis by applying our criteria for corporate cash flow CDOs. "In our cash flow analysis, we used the EUR400 million target par amount, the target weighted-average spread (3.84%), and the target weighted-average coupon (4.19%), as indicated by the collateral manager. We assumed the target weighted-average recovery rates at all rating levels. We applied various cash flow stress scenarios, using four different default patterns, in conjunction with different interest rate stress scenarios, for each liability rating category. "Our credit and cash flow analysis shows that the class B-R to E-R notes benefit from break-even default rate and scenario default rate cushions that we would typically consider to be in line with higher ratings than those assigned. However, as the CLO is still in its reinvestment phase, during which the transaction's credit risk profile could deteriorate, we have capped our preliminary ratings on the notes. The class A-R and F-R notes can withstand stresses commensurate with the assigned preliminary ratings." Until Jan. 15, 2030, when the reinvestment period ends, the collateral manager may substitute the assets in the portfolio, as long the CDO Monitor test is maintained or improved in relation to the initial ratings on the notes. This test looks at the total amount of losses that the transaction can sustain, as established by the initial cash flows for each rating, and compares that with the current portfolio's default potential, plus par losses to date. As a result, until the end of the reinvestment period, the collateral manager may, through trading, cause the transaction's credit risk profile to deteriorate. S&P said, "Under our structured finance sovereign risk criteria, we consider that the transaction's exposure to country risk is sufficiently mitigated at the assigned preliminary ratings. "At closing, we expect that the transaction's documented counterparty replacement and remedy mechanisms will adequately mitigate its exposure to counterparty risk under our current counterparty criteria. "We expect the transaction's legal structure and framework to be bankruptcy remote, in line with our legal criteria. "Following our analysis of the credit, cash flow, counterparty, operational, and legal risks, we believe our preliminary ratings are commensurate with the available credit enhancement for the class A-R to F-R notes. "In addition to our standard analysis, to indicate how rising pressures among speculative-grade corporates could affect our ratings on European CLO transactions, we also assessed the sensitivity of our ratings on the class A-R to E-R notes, based on four hypothetical scenarios. "As our ratings analysis includes additional considerations to be incorporated before we would assign ratings in the 'CCC' category--and we would assign a 'B-' rating if the criteria for assigning a 'CCC' category rating are not met--we have not included the above scenario analysis results for the class F-R notes." Environmental, social, and governance S&P said, "We regard the exposure to environmental, social, and governance (ESG) credit factors in the transaction as being broadly in line with our benchmark for the sector. Primarily due to the diversity of the assets within CLOs, the exposure to environmental credit factors is viewed as below average, social credit factors are below average, and governance credit factors are average. For this transaction, the documents prohibit assets from being related to certain industries. Accordingly, since the exclusion of assets from these industries does not result in material differences between the transaction and our ESG benchmark for the sector, no specific adjustments have been made in our rating analysis to account for any ESG-related risks or opportunities." Ratings list Prelim. Prelim. balance Credit Class rating* (mil. EUR enhancement (%) Interest rate§ A-R AAA (sf) 248.00 38.00 Three/six-month EURIBOR plus 1.39% B-R AA (sf) 41.50 27.63 Three/six-month EURIBOR plus 2.05% C-R A (sf) 23.00 21.88 Three/six-month EURIBOR plus 2.30% D-R BBB- (sf) 29.00 14.63 Three/six-month EURIBOR plus 3.40% E-R BB- (sf) 19.50 9.75 Three/six-month EURIBOR plus 5.75% F-R B- (sf) 13.00 6.50 Three/six-month EURIBOR plus 8.48% Z NR 0.25 N/A N/A Sub. NR 29.175 N/A N/A *The preliminary ratings assigned to the class A-R and B-R notes address timely interest and ultimate principal payments. The preliminary ratings assigned to the class C-R, D-R, E-R, and F-R notes address ultimate interest and principal payments. The payment frequency permanently switches to semiannual and the index switches to six-month EURIBOR when a frequency switch event occurs. EURIBOR--Euro Interbank Offered Rate. NR--Not rated. N/A--Not applicable. Sub.--Subordinated. JANS OFFSITE: Creditors Meeting Set for July 24 ----------------------------------------------- Paragraph 52 of Schedule B1 of the Insolvency (Northern Ireland) Order 1989, an initial meeting of the creditors of Jans Offsite Solutions Limited, will be held at the Law Society of Northern Ireland, Law Society House, 96 Victoria Street, Belfast, BT1 3GN on July 24, 2025 at 11:00 a.m. The purpose of the meeting is to consider the Joint Administrators' proposals and to decide whether to form a Creditors' Committee, and if one is not formed, to seek resolutions fixing the basis of the Joint Administrators' remuneration and expenses, pre-administration costs and category 2 disbursements. Creditors wishing to vote at the meeting must ensure that their proxy forms, together with a full statement of claim, are received via email to mmclean@keenancf.com or forwarded to the offices of Keenan CF, 10th Floor Victoria House, 15-17 Gloucester Street, Belfast, BT1 4LS, not later than 12:00 noon on the business day before the meeting. About Jans Offsite Jans Offsite Solutions Ltd was placed into administration proceedings In the High Court of Justice in Northern Ireland Chancery Division (Company Insolvency), No 29540 of 2025. Scott Murray and Ian Davison of Keenan Corporate Finance Ltd were appointed as administrators on May 19, 2025. Jans Offsite was engaged in the construction of commercial buildings. =================== L U X E M B O U R G =================== BANQUE HAVILLAND: Suspension of Payments Regime Ends ---------------------------------------------------- Banque Havilland S.A., a public limited company incorporated under Luxembourg law (R.C.S. Luxembourg B 147029), established and having its registered office at L-1855 Luxembourg, 35A, avenue J.F. Kennedy, was admitted to the suspension of payments regime by judgment of the district court of Luxembourg dated August 9, 2024 (2024 TALVCOM/00116) for a term ending on February 9, 2025, based on a request filed by the Commission de Surveillance du Secteur Financier on August 1, 2024 following the withdrawal, on the same day, of its authorisation as a credit institution by decision of the European Central Bank. A further judgment dated February 7, 2025 (as rectified by a judgment of February 13, 2025) extended the duration of the suspension of payments regime to August 9, 2025. This notice serves to inform all interested parties of the end of the court-ordered suspension of payments regime from June 20, 2025 on, as ordered by the Court on June 20, 2025 (2025 TALCH02/01036). Consequently, all financial obligations and payment duties of the Company are to be resumed in accordance with applicable laws and regulations. Furthermore, the Company announced the termination of the mandates of the court-appointed joint administrators, FISCH LEGAL (R.C.S. Luxembourg: B 179651), a limited liability company governed by Luxembourg law, registered on list V of the Luxembourg Bar Association, established at L-1334 Luxembourg, 4, rue de Chiny, represented by its manager, Laurent Fisch, lawyer at the Court, residing professionally at the same address, and EY Strategy and Transactions (R. $ Luxembourg: B 88089), a limited liability company under Luxembourg law, having its registered office at L-1855 Luxembourg, 35 E, avenue J.-F. Kennedy, represented by its management board in office, if not by its manager Christophe Vandendorpe, residing professionally at the same address, who have been overseeing the affairs of the Company during the suspension period. The joint administrators will cease all operations and responsibilities as of June 20, 2025. All stakeholders are advised to direct any inquiries regarding this matter to the Company. MAXAM PRILL: Fitch Rates EUR & USD Secured Notes Due 2030 'B+' -------------------------------------------------------------- Fitch Ratings has assigned Maxam Prill S.a r.l.'s (Maxam; B+/Stable) EUR790 million 6% notes due 2030 and USD500 million 7.75% notes due 2030 final senior secured ratings of 'BB-'. The Recovery Rating is 'RR3'. The final rating is in line with the expected rating assigned on June 23, 2025, as the pricing of the instruments and the final documentation largely conform with the information already received. Maxam's 'B+' Long-Term Issuer Default Rating (IDR) reflects its high EBITDA gross leverage, forecast at 5.7x for financial year ending August 2025 (FY25), and its concentrated exposure to the mining sector, which are balanced by a robust business profile as a global asset-light supplier of civil explosives with differentiated technologies. The Stable Outlook reflects its expectation of limited execution risk, given Maxam's strong cash flow generation, good revenue visibility and flexible cost structure, supporting EBITDA growth to EUR342 million by 2028, leading to EBITDA gross leverage falling to 4.7x. Key Rating Drivers Strong Cash Generation: Maxam's asset-light model and product differentiation result in EBITDA margins consistently above 20% and low capex density of about 4% of sales, including growth spending. This robust cash generation underpins the deleveraging capacity. Since Rhone Capital invested in Maxam in 2019 it has divested non-core activities, including the capital-intensive production of ammonium nitrate (AN), the key feedstock for the manufacture of its explosives. Fitch expects Maxam to generate positive free cash flow (FCF) before dividends of about EUR100 million a year between 2025 and 2028. High Barriers to Entry: Maxam's proprietary technologies, service offering that includes formulation, handling and initiation services, as well as its footprint of flexible plants located close to customers' operations, create strong barriers to entry. This is highlighted by a low customer churn, increasing sales volumes and a high share of service revenues. Fitch believes that Maxam's key products offer superior properties than some of its competitors', improving the customers cost to use and mining performance and would be difficult to replicate due to patents and required infrastructure. Order Book Provides Revenue Visibility: Maxam's order book of about EUR2 billion provides a strong revenue visibility and reflects its commercial success. The long tenure of contracts and the visibility on mining projects production also underpin revenue predictability. Maxam has good diversification with no single mine representing more than 10% of revenues, mitigating risks of fluctuations or delays in production levels where explosives are a consumable. In the mining sector, the average duration of contracts is five years. This period is shorter in the infrastructure market, although it comes with high renewal rates, given Maxam's leading position in Europe. Deleveraging Path: The notes issue is to refinance existing loans at its operating subsidiary, MaxamCorp Holding, S.L. (MaxamCorp), and pay a dividend to shareholders, leading to an EBITDA gross leverage forecast of 5.7x for FYE25. The deleveraging has modest execution risks, given the company's strong and resilient operating cash flow, and the good earnings visibility offered by the order book. Fitch, therefore, expects EBITDA gross leverage to fall to 4.7x by 2028, assuming no gross debt repayment, as Fitch-defined EBITDA rises to EUR342 million in 2028 from EUR256 million in 2024. Mining Sector Exposure: About 64% of Maxam's revenues are concentrated in mining, particularly of gold and copper. These metals have strong growth opportunities but are still exposed to cycles, depending on the mismatch between supply and demand. The mining exposure also entails risks related to operations in lower-rated jurisdictions in Africa or South America. This is mitigated by a good geographical diversification, with Chile growing in importance, and a portfolio of solid customers. AN Cost Pass-Through: Maxam's contract structure allows for the pass-through of AN costs, which represent about 50% of the production costs of explosives. In 2021-2022, Maxam continued increasing its profits, despite high AN prices, driven by rising gas costs and disruptions in global supply. Its exit from AN production has been followed by more stable profitability, especially given higher gas costs in Europe. Maxam has secured long-term contracts with global AN suppliers for most of its requirements, and fills its need on the spot markets. Structural Subordination Risk: The notes issued by Maxam as the holding company are structurally subordinated to existing debt at MaxamCorp level, some of which have covenants restricting its ability to upstream dividend. This is partially mitigated by a downstream loan from Maxam to MaxamCorp, as well as the availability of a EUR175 million revolving credit facility to cover temporary upstreaming restrictions. Moreover, further refinancing of operating company debt could lift some of the covenant restrictions. Peer Analysis In the absence of directly related peers, Fitch compares Maxam to high-yield issuers with high and resilient margins and cash flows. Compared with Nouryon Limited (B+/Stable), a global specialty chemical producer with EBITDA exceeding USD1 billion, Maxam is smaller and has weaker diversification but similar margins and capex intensity. Maxam, however, has a greater revenue visibility. Both companies have similar leverage levels. Ahlstrom Holding 3 Oy (B+/Negative) is a global producer of specialty fibres, with EBITDA of about EUR421 million and EBITDA margins in the mid-teens in 2024. Ahlstrom is larger and more diversified by market, but has higher leverage, which will trend towards 5x by 2027. Maxam is larger and more profitable than Italmatch Chemicals S.p.A. (B/Stable) for a similar capex intensity, leading to stronger FCF generation before dividends. Maxam and Italmatch have similar leverage, in the 5x area. Key Assumptions - Revenue rise of about 5%-7% a year to 2028 - EBITDA margin averaging 25% between 2025 and 2028 - Capex of about EUR50 million a year in 2025-2028 - Dividend payout and shares repurchase of EUR788 million in 2025; no dividend in 2026; dividend averaging EUR90 million a year in 2027-2028 - No material large-size M&A or divestment - Fitch has restricted EUR10 million cash, relating to cash balances held in countries where extraction is constrained Recovery Analysis The recovery analysis assumes that Maxam would be reorganised as a going-concern (GC) in bankruptcy rather than liquidated. The GC EBITDA estimate reflects a sustainable, post-reorganisation EBITDA level on which Fitch bases an enterprise valuation. The GC EBITDA of EUR240 million reflects unsuccessful renewal of key contracts and reduced activity leading to lower profits. Fitch uses a multiple of 5.5x to calculate a GC enterprise value for the company because of its robust market position and technological differentiation creating big barriers to entry, as well as the asset-light business model that underpins its FCF generation. Fitch assumes Maxam's revolving credit facility would be fully drawn and rank equally with senior secured debt issued at the parent level, and the factoring facility would be replaced by an equivalent super senior facility. After deducting 10% for administrative claims, Fitch's analysis resulted in a waterfall-generated recovery computation for the senior secured instrument in the 'RR3' band, indicating a 'BB-' instrument rating. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - EBITDA gross leverage above 6x on a sustained basis - EBITDA interest coverage below 2x on a sustained basis - Neutral to negative FCF on a sustained basis Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - EBITDA gross leverage below 4.5x on a sustained basis - EBITDA interest coverage above 3.5x on a sustained basis - Positive FCF on a sustained basis Liquidity and Debt Structure Fitch expects Maxam's opening cash to stand at EUR75 million, which corresponds to operational needs. Fitch expects the company's working capital to be funded by operational cash generation and local credit lines, with the new EUR175 million revolving credit facility to be kept undrawn to mitigate risks of cash upstreaming restrictions and maintain flexibility for timely interest payment at the holding company level. The notes issued at Maxam are structurally subordinated to existing debt at the operating entities level. However, Fitch expects MaxamCorp to be able to upstream sufficient cash to meet interest payments. Fitch would expect Maxam to raise additional funds by end-2026 to refinance EUR125 million of debt that is coming due. Issuer Profile Maxam is a global civil explosive producer providing integrated products and services to the mining and infrastructure industry. Date of Relevant Committee 19 June 2025 MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Maxam Prill S.a r.l. senior secured LT BB- New Rating RR3 senior secured LT BB- New Rating RR3 BB-(EXP) MAXAM PRILL: S&P Rates Proposed Notes 'B+', Outlook Stable ---------------------------------------------------------- S&P Global Ratings assigned its 'B+' local and foreign currency ratings to Maxam Prill S.a.r.l. (Maxam) and its proposed notes, and a '4' recovery rating to the notes (indicating 35% expected recovery in the event of a default). The stable outlook on Maxam reflects S&P's expectation that the company will maintain its solid market position, and diverse and efficient operations, which should allow it to maintain FFO to debt of 10%-14% and 4.0x-4.5x net debt to EBITDA. Maxam has issued EUR790 million 6.0% notes and $500 million 7.75% notes, which it will use to partly refinance debt, pay dividends and general corporate purposes, along with the signing of a EUR175 million revolving credit facility (RCF). Maxam is a holding company for Spain-based Maxamcorp Holding S.L., one of the global leaders in commercial explosives, with EUR224 million of S&P Global Ratings-adjusted EBITDA (S&P includes some one-off cash costs in EBITDA calculation) in fiscal year ended August 2024. Financial sponsor, Rhone Capital (Rhone) owns a majority stake in Maxam, resulting in high leverage with funds from operations (FFO) to debt of 14.3% in 2024, which S&P expects to decline toward 10%-14% in the next few years. S&P said, "The 'B+' ratings are in line with the preliminary ratings we assigned on June 23, 2025. Our base-case assumptions have not changed, except for the update of the notes' margins, which are not material from a credit metrics and rating standpoint. "Our rating on Maxam is constrained by its aggressive financial policies driven by its ownership by a financial sponsor, Rhone. Rhone first invested in Maxam in 2019 with a 45% stake, with its stake later increasing to 73%. Maxam has made large distributions to shareholders through dividends and buybacks over the last few years and we expect leverage to remain high with net debt to EBITDA of about 4.0x-4.5x, roughly corresponding to FFO to debt of 10%-14%, and which we consider to be aggressive. Being a financial sponsor, there is a possibility that Rhone will divest from its stake at some point with a new shareholder coming in, which could translate into a different financial setup, including a more aggressive one. We therefore cap our assessment of Maxam's financial risk at highly leveraged to reflect the currently aggressive and highly uncertain future financial policy." Despite strong performance of Maxam's business, its leverage will remain high in the coming years with FFO to debt of 10%-14% after 2025 releveraging. S&P said, "We expect revenue growth of up to 15% in 2025 and 5% in 2026. This reflects new customers in the pipeline (mainly in Latin America and Africa), greater revenue from existing clients, and the expansion of mining operations. In our base case, we anticipate the company will be able to retain its strong margins of 20%-25%, thanks to cost control initiatives and the ability to pass through the volatility of raw material prices. We anticipate S&P Global Ratings-adjusted EBITDA of about EUR300 million in 2025 increasing to about EUR320 million (which includes our adjustment for dividends received from joint ventures of about EUR15 million-EUR30 million) in 2026 from EUR224 million in 2024 (this number includes EUR41.5 million costs related to the cancellation of the old management incentive plan and EUR7.3 million of restructuring costs). Its adjusted debt will increase significantly in 2025 because of EUR750 million of dividends to be paid in total this year. This means leverage will remain high with FFO to debt of 10%-14% in the coming years. We expect that deleveraging will be possible through gradual EBITDA growth, but we do not expect the company to reduce its gross debt in the coming years." Maxam's business risk is supported by its position as one of the leading companies globally in the commercial explosives and explosives-related services. The company operates in more than 40 countries and has the leading market positions in its domestic European market. It is also one of the top three companies in the sector in Latin America, Africa, and Central Asia. The sector is highly regulated, and regulations have tightened over time, creating high barriers to entry. Maxam also has certain technological advantages with its know-how products such as Rioflex, which is adaptable to client's needs and allows for optimized rock fragmentation. Given the company's focus on retaining its technological advantages through research and development processes and offering tailored integrated solutions, S&P thinks it is well positioned to keep its solid market position globally. Due to the inherent features of the business, client retention in the medium term is high, and the company has a very high rate of contract renewals with existing customers. As mining complexity is increasing across the globe, demand for Maxam's services is likely to increase. The company focuses on the gold and copper mining sectors, which provide for its advantageous positioning compared with direct peers. Unlike Orica Ltd. (BBB/Stable/A-2) and Dyno Nobel Ltd. (BBB/Stable/--), which is the new name for Incitec Pivot Ltd., Maxam has limited exposure to the coal mining industry which is subject to energy transition risks. About 60% of Maxam's fiscal 2024 revenue was from the services predominantly to the gold and copper mining sectors. S&P thinks that the rising needs of energy transition will support the related mining operations. The company is proficient in the underwater blasting, tunneling, and excavations services in the infrastructure segment--as evidenced by the completion of the Tuas container terminal in Singapore--generating about 22% of the company's revenue. Following the disposal of noncore assets in 2023 and strong cost control initiatives, Maxam has achieved leading margins in the sector. In fiscal 2024, the company's S&P Global Ratings-adjusted EBITDA margins reached 22%, higher than the average margin level demonstrated previously of about 12%-17%. Maxam's profitability is also now considerably stronger than that of Orica, which had EBITDA margins of 12%-14% in the last three years, while Dyno Nobel's were about 13% in 2023-2024. S&P said, "We note Maxam has a limited track record of posting strong profitability. Given the ability to pass through raw material costs to its customers (stipulated by the contracts' terms) and thanks to the unique business model with installation of small modular portable explosive plants on customer sites (reducing transport expenses), we think that the company can protect its margins in the next two to three years." Maxam is smaller than its direct peers. In fiscal 2024, Maxam generated revenue of EUR1 billion with S&P Global Ratings-adjusted EBITDA of EUR224 million. Orica's EBITDA is about 3.3x larger and Dyno Nobel's EBITDA is approximately 1.9x larger than Maxam's. However, the difference in EBIT, which takes into account capital intensity of the business, is lower, due to peers' vertical integration into ammonium nitrate production. In fiscal 2024, Orica generated about 2.4x of Maxam's EUR200 million EBIT and Dyno Nobel about 1.5x. Both Australia-based peers have a very strong presence on their domestic market and in North America. When compared with a wider selection of peers in the specialty chemicals industry, the companies within the satisfactory category tend to have a larger scale than Maxam. Maxam has a more asset-light model than its direct peers and has certain advantages to underpin its strategy. However, S&P still expects competition from other global players to be strong, and Maxam has not yet established a track record of this material organic growth. S&P said, "The stable outlook on Maxam reflects our expectation that the company will maintain its solid market position, diverse and efficient operations, and stable profitability over the next 12-24 months, which will allow it to deliver stronger EBITDA in the coming years. "Stronger EBITDA should support gradual deleveraging toward 4.0x-4.5x, which we consider commensurate with the current rating. "We could lower the rating if Maxam's market position and profitability weakens, leading to EBITDA pressures and consequent leverage materially above 5.0x." Aggressive actions of the financial sponsor preventing deleveraging or leading to a leverage increase could also trigger a downgrade. Additional rating pressure could also materialize because of deteriorating liquidity, resulting from the inability to refinance upcoming maturities, adverse material working capital swings, or insufficient covenant headroom. S&P said, "We consider an upgrade to be unlikely over the next 12 months as it is constrained by the limited visibility of future ownership and financial policy. Rating upside might follow if the company's financial policy turns more conservative with leverage targets of about 3.0x, while the company at the same time increases the scale of operations. This could also occur if we expect its financial sponsors to reduce their collective common equity ownership stakes to below 50% in the intermediate term." ========= M A L T A ========= FIMBANK PLC: Fitch Hikes LongTerm IDR to 'B+', Outlook Stable ------------------------------------------------------------- Fitch Ratings has upgraded FIMBank p.l.c.'s (FIM) Long-Term Issuer Default Rating (IDR) to 'B+' from 'B' and Viability Rating (VR) to 'b+' from 'b'. The Outlook on the Long-Term IDR is Stable. The upgrades reflect FIM's improved business profile sustainability following the drastic reduction in non-performing assets (NPA, which include on- and off-balance-sheet exposures and are a better indicator of the bank's asset quality) and loan impairment charges (LICs) since end-2022. These allowed the bank to generate sustainably improved, albeit still modest, profitability, which Fitch expects to benefit from improved capital buffers and a return to business growth. Key Rating Drivers Small Specialised Bank, Improving Performance: FIM's VR and IDRs reflect its status as a small trade finance bank with a moderate franchise in its niches, adequate asset quality, modest but improving profitability and capitalisation exposed to above-average risks. Funding and liquidity are stable and relative rating strengths. Resilient Performance Despite Geopolitical Tensions: Fitch expects a slowdown in world trade in 2025 from mounting geopolitical tensions, protectionist policies and trade disputes. However, Fitch believes that the performance of the European trade finance banks Fitch rates will remain resilient in this context and potentially rebound from 2026, assuming tensions ease. Niche Franchise, Focus on Profitability: FIM operates in a few trade finance niches with adequate expertise and a geographically diversified reach. The bank's improved asset quality and restored capital buffers should support growth across all business lines, allowing it to strengthen its currently modest revenue generation and profitability. Above-Average Risk Profile: FIM has tightened its underwriting standards over the past four years by reducing country and client limits and exiting weaker credits and some higher-risk geographies. However, its risk profile remains above average, owing to its exposure to emerging-market risks, material trading activities at its forfaiting subsidiary and structurally above-average loan concentrations. Adequate Asset Quality, Concentrations: The bank significantly reduced its NPA ratio to a manageable 2% at end-2024 (end-2022: 11%) due to large write-offs and satisfactory recoveries, while new business has not generated material NPA inflows. Fitch expects FIM's credit risk to remain manageable, although the bank is still exposed to the risk of unexpected large defaults. Modest and Growth-Reliant Profitability: FIM had small operating profits in 2023 and 2024 (operating profit/risk weighted assets (RWAs) ratio of 0.9% in 2024) following three years of losses due to impairments of legacy exposures. Improved capital availability should support FIM's ability to grow business volumes and generate more sustainable profits. Its profitability assessment remains constrained by the bank's small revenue base and sticky costs, resulting in weak ability to absorb unexpected losses. Sufficient Capital Buffers: FIM's common equity Tier 1 ratio of 21.3% at end-2024 was 590bp above regulatory capital requirements plus Pillar 2 guidance. This has improved materially since end-2023 due to the bank's deleveraging and internal capital generation. Improved capital buffers, including from a recent Tier 2 issuance, should support new business origination. However, capital remains at risk from exposure to emerging markets and borrower concentration risks. Funding Reliant on Online Deposits: Customer deposits represented about 73% of FIM's funding at end-2024 and were well in excess of loans. FIM sources deposits mostly online, including outside Malta via third-party platforms. This makes deposits more price-sensitive than at traditional commercial banks. The short-term nature of FIM's activities, as well as adequate liquid assets, underpin liquidity. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade The ratings could be downgraded if FIM's NPA ratio rises above 7% on a sustained basis or if operating profit falls structurally well below 1% of RWAs. The CET1 ratio falling towards 15% due to losses, resulting in tight buffers over regulatory requirements, or evidence of funding instability would also be negative for the ratings. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade An upgrade would require a further strengthening of FIM's business profile that would allow it to improve its operating profit/RWAs ratio towards 1.5% of RWAs on a sustained basis, supported by higher business volumes, well-managed costs and manageable LICs. An upgrade would also require the NPA ratio remaining below 5% on a sustained basis, underlining the effectiveness of the bank's risk management framework, while maintaining adequate capital buffers and a stable funding profile. An upgrade of the Shareholder Support Rating (SSR) by two or more notches could also result in an upgrade of FIM's Long-Term IDR, as it would then be driven by shareholder support. SSR FIM's SSR of 'b-' is three notches below the Long- Term IDR of its indirect majority shareholder Kuwait Projects Company Holding K.S.C.P. (KIPCO, BB-/Negative), mainly reflecting its view of FIM's limited role in the group. This is due to the bank's limited synergies with the group and business activities that are mostly outside of the group's main markets. The SSR also reflects FIM's record of weak financial performance and Fitch's view that support for FIM could be significant for KIPCO given the bank's size. The SSR is underpinned by evidence of support being provided in the past and some management integration. The SSR is primarily sensitive to a change in Fitch's assessment of KIPCO's propensity to support the bank. This could result, for example, from FIM's increased strategic importance for the group by means of greater synergies and integration and an established record of supporting the group's objectives and performance. Conversely the notching could widen if KIPCO put the bank up for sale or does not provide sufficient support in a timely manner. VR ADJUSTMENTS The operating environment of 'bb+' is below the 'a' implied category score due to the following adjustment reason: geographical scope (negative). The asset quality score of 'bb-' is above the 'b & below' implied category score due to the following adjustment reasons: historical and future metrics (positive). The capitalisation and leverage score of 'b+' is below the 'bbb' implied category score due to the following adjustment reasons: internal capital generation and growth (negative), size of capital base (negative). Public Ratings with Credit Linkage to other ratings FIM's SSR is linked to KIPCO's Long-Term IDR. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Prior ----------- ------ ----- FIMBank p.l.c. LT IDR B+ Upgrade B ST IDR B Affirmed B Viability b+ Upgrade b Shareholder Support b- Affirmed b- ===================== N E T H E R L A N D S ===================== NOBIAN HOLDING 2: Fitch Affirms & Withdraws 'B' IDR, Stable Outlook ------------------------------------------------------------------- Fitch Ratings has affirmed Nobian Holding 2 B.V.'s Long Term Issuer Default Rating (IDR) at 'B'. The Outlook is Stable. Fitch has also affirmed the senior secured ratings of instruments issued by Nobian Finance B.V. at 'B+'. The Recovery Rating is 'RR3'. Fitch has simultaneously withdrawn the ratings. Nobian's Long Term IDR reflects its high EBITDA gross leverage and exposure to the volatility of caustic soda prices and chemical demand. It also captures the company's strong position in the European high-purity salt, chlorine, caustic, chloromethanes hydrogen and energy storage markets and the big barriers to entry. Nobian benefits from a robust cost position, demonstrates strong pass-through capabilities and maintains high margins. Fitch has chosen to withdraw Nobian's ratings for commercial reasons. Key Rating Drivers Resilient Profitability: Nobian's current performance is being affected by subdued demand and high regional energy costs, in line with broader trends in the chemical industry. Fitch-calculated EBITDA decreased to EUR286 million in 2024 and Fitch projects it will remain similar in 2025, at around EUR291 million. The EBITDA margin declined to a lesser extent and remained above 20%. Nobian's profitability has proven relatively resilient to market challenges and a weak start to 2025, supported by strong pricing and margin flexibility in its salt segment and expected cash flow recovery as market conditions improve in 2H25. Solid Cash Generation: Fitch considers Nobian's cash flow from operations solid. It consistently covers maintenance capex, despite an increasing interest burden, with double-digit funds from operations (FFO) margins and contained working capital fluctuations. Fitch forecasts marginally negative free cash flow (FCF) in 2025, primarily due to high growth capex. Fitch expects that Nobian's current liquidity position and future cash flows will be adequate to fund capex without the need to raise additional debt. Fitch does not assume any dividend distributions over 2025-2028. Refinancing Extends Maturity Profile: Nobian has refinanced its approximately EUR1.5 billion debt, extending the maturity profile. It extended the maturity of its EUR974 million term loan B (TLB) to July 2029 from July 2026. Fitch expects Nobian to use the proceeds of the term loans raised in March 2025 to repay the outstanding EUR525 million notes due July 2026. This results in an all-TLB debt structure with about EUR1 billion due in 2029 and EUR0.5 billion in 2030. Resilient Business Model: Nobian is able to pass on energy cost fluctuations due to its position as the leading high-purity salt producer in the region and over-the-fence supplier of major raw materials to strong chemical clusters. The company's profitability is largely influenced by the prices of caustic soda, but it has maintained a robust EBITDA margin of 20% over the last 12 months, despite falling prices and weak chemical demand. The strength of its customers allowed Nobian to maintain higher operating rates than the industry average in an adverse environment. Leverage Rising, Rating Headroom: Fitch expects Nobian's Fitch-adjusted EBITDA to be EUR291 million in 2025 and that debt will remain stable, leading to EBITDA gross leverage of 5.3x for 2025. However, Fitch expects Nobian's EBITDA to improve from the current lows to average around EUR344 million over 2026-2028. Therefore, EBITDA gross leverage will improve to 4.7x in 2026, and to about 4.3x by 2027-2028, assuming that capex also falls from the 2024 peak and debt remains stable. This places Nobian comfortably at its rating. European Chlor-Alkali Leader: Nobian's large share of the European merchant salt market for chemical transformation provides pricing power, especially since a switch to membrane technology in the region in 2017, a process that requires higher-purity salt. The company is also the largest and second-largest merchant producer of chlorine and caustic soda, respectively, in Europe and the largest chloromethane producer. Planned capacity expansions will reinforce its regional leadership in markets that are already highly concentrated. Decarbonization Opportunities: Nobian has several projects that could be supported by national net-zero strategies. It is well positioned to provide salt caverns for energy storage, given its expertise, which could provide large incremental EBITDA over the medium term. Other projects may be more capex-intensive but are not at the stage of taking final investment decisions so Fitch has not included them in its projections. Peer Analysis Nobian competes in the chlor-alkali value chain with INEOS Quattro Holdings Limited (B+/Stable). INEOS Quattro is larger and more diversified both in terms of activities and geographic presence. However, its EBITDA leverage is higher than Nobian's, reflecting the impact of persistent oversupply and weak demand in the chemicals sector. Nobian is smaller than Nouryon Holding B.V. (B+/Stable), from which it was separated, and has exposure to more commoditised chemicals and lacks the latter's global presence. Nouryon has generally higher EBITDA gross leverage but its EBITDA is far more stable than Nobian's. Italmatch Chemicals S.p.A. (B/Stable) is also more diversified than Nobian and focuses on specialty chemicals. However, Italmatch has weaker EBITDA margins, operates on a smaller scale, and maintains higher leverage than Nobian. Key Assumptions - Chlor-alkali and salt volumes increasing from 2025 on demand recovery and capacity expansion, marginally declining in 2027 and normalising in 2028 - Fitch-adjusted EBITDA margin of 20.5% in 2025, before rising to 23% by 2028 - Capex of around EUR180 million in 2025, averaging EUR135 million afterwards - No dividends payments - No equity contributions towards partnerships or projects Recovery Analysis The recovery analysis assumes that Nobian would be reorganised as a going-concern (GC) in bankruptcy rather than liquidated. Its GC EBITDA estimate reflects its view of a sustainable, post-reorganisation EBITDA level on which Fitch bases the enterprise valuation (EV). The GC EBITDA of EUR250 million reflects a combination of low caustic soda prices and demand, or production-related pressure on sales volumes, as in 2020-2021, but also considers corrective measures taken to offset adverse conditions. Fitch uses a multiple of 5x to estimate a GC EV for Nobian because of its leadership position, solid sector growth trends, and higher barriers to entry and profit margins than peers, but also the volatile cash flow of its commodity-like products and its concentrated exposure to Europe. Fitch assumes the RCF to be fully drawn and to rank equally with the TLBs. After deducting 10% for administrative claims, Fitch's analysis resulted in a waterfall-generated recovery computation for the senior secured instruments in the 'RR3' band, indicating a 'B+' instrument rating. RATING SENSITIVITIES Not applicable as the ratings have been withdrawn. Liquidity and Debt Structure Nobian's available cash decreased to EUR55 million at end-March 2025 reflecting lower operational cash generation, which was affected by tax payments from older years, planned high capex and seasonal working capital effect. Its EUR200 million revolving credit facility (RCF) remained undrawn. Nobian placed an incremental EUR50 million TLB in June 2025, reinforcing its liquidity. It also has access to a EUR100 million receivables backed lending (RBL) facility. Nobian's debt structure consists entirely of TLB facilities, with approximately EUR1 billion maturing in 2029 and EUR0.5 billion in 2030. Its RBL and RCF mature in 2028 and 2029 respectively. Issuer Profile Nobian is a fully vertically integrated European leader in the production of salt, chlor-alkali (chlorine and its co-product caustic soda) and chloromethanes. MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Following the withdrawal of ratings for Nobian, Fitch will no longer be providing the associated ESG Relevance Scores. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Nobian Holding 2 B.V. LT IDR B Affirmed B LT IDR WD Withdrawn Nobian Finance B.V. senior secured LT B+ Affirmed RR3 B+ senior secured LT WD Withdrawn SIGNATURE FOODS: S&P Downgrades ICR to 'B-', Outlook Stable ----------------------------------------------------------- S&P Global Ratings lowered its long-term issuer credit rating on Netherlands-based convenience food manufacturer Signature Foods B.V. to 'B-'. At the same time, S&P lowered its issue rating on Signature Foods' EUR341 million term loan B (TLB) to 'B', with an unchanged recovery rating at '3' and recovery prospects of 50%-70% (rounded estimate: 60%). The stable outlook reflects S&P's view that the company will gradually recover profitability on efficiency gains such that leverage should reduce, while positive FOCF generation remains and adequate liquidity is sustained, addressing the refinancing of its upcoming debt maturities in a timely manner. S&P said, "Our rating action reflects Signature Foods' weaker-than-anticipated operating performance and credit metrics in fiscal 2025. S&P Global Ratings-adjusted debt to EBITDA was approximately 13.6x (8.4x excluding the outstanding vendor loan from former owner Pamplona Capital) in fiscal 2025 compared to 11.1x (7.0x) in 2024. This is a material deviation from our previous forecast of 11.5x-12.0x (7.0x-7.5x) for fiscal 2025. While revenues increased by 2% to EUR448 million in 2025 compared to EUR438 million in 2024, profitability deteriorated with the adjusted EBITDA margin reducing to 12.8% in 2025 compared to 15.6% in 2024. This stems mostly from a softer product mix, as consumers down trade to more affordable private label options and buy into promotions, and the outperformance of lower-margin brands. Additionally, there have been higher nonrecurring expenditures tied to the implementation of the new enterprise resource planning (ERP) system, for about EUR7.5 million, and to the ongoing cost optimization program. The lower-than-expected EBITDA limits the S&P Global Ratings-adjusted free operating cash flow (FOCF) generation, which was only about EUR2 million in fiscal 2025 compared to EUR34 million in 2024. Our S&P Global Ratings-adjusted leverage for fiscal 2026 mainly includes the EUR341 million TLB, the EUR13 million drawn revolving credit facility (RCF), the EUR121 million payment-in-kind (PIK) loan, and the approximately EUR292 million vendor loan from Pamplona Capital. We understand that the outstanding PIK loan and vendor loan do not require cash interest payments and that they are subordinated to the bank debt, however, their annually accruing interest increases the company's gross debt and constraining its deleveraging effort. "We anticipate limited EBITDA growth in fiscal 2026 because of the protracted product mix and elevated nonrecurring costs. We expect modest revenue growth of about 3.0%-4.0% for fiscal 2026, driven by the positive performance of the company's private label business and growing volumes in some of its brands, such as Homann, Westland, Topking, and Tapas. However, we think that the stabilization of input costs will result in pricing pressure from retailers, although partly offset by the company's strong relationships with local customers and portfolio of well-known local brands. Cumulative inflation on food prices also leads to downtrading, limiting the recovery of Signature Foods' profitability. We understand the company remains focused on improving the efficiency of its operations, particularly in the Tapas segment, including downsizing, reducing waste, and optimizing sourcing and recipes, which should result in profitability gains over the next few years. That said, we forecast limited S&P Global Ratings-adjusted EBITDA expansion in fiscal 2026 to about EUR60 million-EUR65 million (EUR57 million in fiscal 2025) due to the soft market conditions and elevated nonrecurring expenditures (of about EUR8.0 million-EUR10 million in 2026) tied to the ERP roll-out and ongoing cost optimization program. This should translate into S&P Global Ratings-adjusted debt to EBITDA of about 13.0x in fiscal 2026 (approximately 8.0x excluding the outstanding vendor loan), and funds from operations (FFO) to cash interest coverage of 2.5x. "Signature Foods should still maintain adequate liquidity supported by positive FOCF generation. We forecast FOCF to improve in fiscal 2026 to about EUR10 million-EUR15 million (EUR2 million in fiscal 2025) on the back of expanding EBITDA, stable working capital flows, limited capital expenditure (capex) needs, and receding interest payments on lower benchmark rates. We expect capex to increase modestly to about EUR15 million in fiscal 2026 compared to EUR9 million in the previous year. This relates to postponed investments, capacity expansion, and efficiency projects, including the redesign of production facilities and improving lines, along with maintenance capex. Based on our understanding of the group's risk tolerance, we expect it will have a prudent financial policy on acquisitions and no dividends for the time being. Signature Foods also benefits from its EUR49 million undrawn RCF, and absence of short-term debt maturities. The super senior RCF is due in September 2027, and the EUR341 million TLB in March 2028. We think that the company will address the refinancing of its upcoming debt maturities in a timely manner. "The stable outlook reflects our view that Signature Foods' operating performance should recover over the coming 12 months, supported by modest topline growth and ongoing cost optimization initiatives. We forecast S&P Global Ratings-adjusted EBIDTA to rebound to about EUR60 million-EUR65 million in fiscal 2026, S&P Global Ratings-adjusted leverage (excluding the vendor loan) decreasing to about 8.0x in fiscal 2026, and FOCF generation improving to about EUR10 million-EUR15 million. We also expect the company will maintain an adequate liquidity and address its upcoming debt maturities in a timely manner. "We could take a negative rating action on Signature Foods if the company underperforms our base-case forecast and demonstrates lower-than-anticipated EBITDA generation such that adjusted debt to EBITDA (excluding the vendor loan) is above 10.0x without prospects of deleveraging, or if we saw increasing debt refinancing risk creating liquidity pressure. "We could also take a negative rating action if we see negative FOCF generation. This could stem from continued market weakness or operational setbacks with reorganizational cost savings not materializing. "We could take a positive rating action if S&P Global Ratings-adjusted debt to EBITDA (excluding the vendor loan) reduced well below 7.0x on a sustained basis and FOCF increased from current levels. Signature Foods would also need to present a deliverable refinancing plan ahead of the 2027 and 2028 maturities." =========== R U S S I A =========== [] Fitch Hikes IDRs on 4 Natural Resource Uzbek Corporates to 'BB' ------------------------------------------------------------------ Fitch Ratings has upgraded the Long-Term Issuer Default Ratings (IDRs) of JSC Almalyk Mining and Metallurgical Complex (Almalyk), JSC Navoi Mining and Metallurgical Company (NMMC), State Enterprise Navoiyuran and JSC Uzbekneftegaz (UNG) to 'BB' from 'BB-'. The Outlooks are Stable. Fitch has also assigned Navoiyuran's new notes a senior unsecured rating of 'BB' with a Recovery Rating of 'RR4'. The rating actions follow the upgrade of Uzbekistan's Long-Term Foreign-Currency IDR on June 26, 2025. The corporates are rated under Fitch's Government-Related Entities (GRE) Rating Criteria. Key Rating Drivers JSC Almalyk Mining and Metallurgical Complex Ratings Equalised: The 'responsibility to support' factors are 'Strong', as the company is 98% owned by the state and has received substantial support from the government. Fitch assesses 'incentives to support' as 'Strong' as it is responsible for all copper produced in the country, is the second-largest taxpayer and second-largest exporter, and is gradually increasing its share of external funding for the Yoshlik project as it expects the smelter to be financed by a foreign syndicate. The Standalone Credit Profile (SCP) is 'b+'. The GRE support score is 30 out of 60 so the rating is equalised with that of the sovereign. State Enterprise Navoiyuran Ratings Equalised: Fitch views the 'responsibility to support' factors as 'Strong', as the company is fully owned by the state and it has a tight control over the company. The company did not need any support from the government since its inception as a separate entity in 2022, while there has been evidence of support to its peers. Fitch assesses 'preservation of government policy role' as 'Strong' considering the company's important role in the nuclear production cycle and its political importance to the state. The company became the third-largest tax contributor in 2024. The company issued USD300 million notes in June 2025. Fitch has since reviewed the 'contagion risk' score to 'Strong' from the previous 'Not Strong Enough'. Consequently, Fitch has revised the GRE support score to 30 from 20 out of 60. Navoiyuran's SCP is 'bb-'. Its rating is equalised with the sovereign's. JSC Navoi Mining and Metallurgical Company Sovereign Constrains Rating: The 'decision making and oversight factor' is 'Strong', given the company's 100% state ownership. Fitch assesses 'precedents of support' as 'Strong' as 19% of total debt at end-2024 was provided by government entities. The company has not received any equity injections over the past 10 years. Fitch assesses NMMC's preservation of government policy role as 'Strong' as it is responsible for more than 80% of gold produced in the country and is the largest taxpayer and a major employer in Uzbekistan. NMMC can be considered a reference entity for the state, given its size and international debt amount, therefore, Fitch assesses 'contagion risk' as 'Strong'. The Standalone Credit Profile (SCP) is 'bb+', and the GRE support score is 30 out of 60. NMMC's rating is constrained by Uzbekistan, its sole shareholder, given its close links with the sovereign. JSC Uzbekneftegaz Rating Equalised: UNG's GRE assessment includes a 'Very Strong' score for 'decision-making and oversight', reflecting full state ownership and control, as well as regulated gas prices. 'Precedents of support' are also 'Very Strong,' with significant state guarantees of UNG's debt and additional support through tax incentives and reduced dividend requirements. 'Incentives to support' are rated 'Strong,' given UNG's policy role, critical energy supply, and systemic importance. The SCP is 'b' while the GRE support score is 40 out of 60, resulting in a rating equalised with the sovereign's. RATING SENSITIVITIES JSC Almalyk Mining and Metallurgical Complex Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Negative sovereign rating action - Material weakening of ties with the state - EBITDA gross leverage above 2.5x on a sustained basis - Unremedied liquidity issues Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - EBITDA gross leverage below 1.5x on a sustained basis could be positive for the SCP, but not necessarily the IDR State Enterprise Navoiyuran Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Negative sovereign rating action - EBITDA gross leverage above 1.5x on a sustained basis could be negative for the SCP, but not necessarily the IDR - Deterioration of the uranium market leading to a material weakness of the financial metrics could be negative for the SCP, but not necessarily the IDR - Unremedied liquidity issues Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Positive sovereign rating action - EBITDA gross leverage below 1x on a sustained basis could be positive for the SCP, but not necessarily for the IDR - Improvement in liquidity position and funding structure could be positive for the SCP, but not necessarily the IDR - Positive FCF on a sustained basis could be positive for the SCP, but not necessarily the IDR JSC Navoi Mining and Metallurgical Company Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Negative sovereign rating action - EBITDA gross leverage above 2.0x on a sustained basis could be negative for the SCP, but not necessarily the IDR - Sustained negative FCF due to dividends or large capex or M&A activity could be negative for the SCP, but not necessarily the IDR. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Positive rating action on the sovereign JSC Uzbekneftegaz Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - A sovereign downgrade - EBITDA net leverage consistently above 4.5x, for example, as a result of further delays to UNG's downstream projects, could be negative for the SCP and the IDR - Material deterioration in liquidity Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - EBITDA net leverage sustained below 3.5x due to a record of liberalisation of natural gas prices in Uzbekistan, if accompanied by improved liquidity, could be positive for the SCP, but not necessarily for the IDR Public Ratings with Credit Linkage to other ratings Almalyk's rating is equalised with the sovereign's. NMMC's rating is constrained by the sovereign's. Navoiyuran's rating is equalised with the sovereign's. UNG's rating is equalised with the sovereign's. MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. ESG Considerations JSC Almalyk Mining and Metallurgical Complex has an ESG Relevance Score of '4' for Financial Transparency due to limited record of audited financial statements and publication timeliness, which has a negative impact on the credit profile, and is relevant to the rating[s] in conjunction with other factors. JSC Navoi Mining and Metallurgical Company has an ESG Relevance Score of '4' for Financial Transparency due to limited record of audited financial statements and publication timeliness, which has a negative impact on the credit profile, and is relevant to the rating[s] in conjunction with other factors. JSC Uzbekneftegaz has an ESG Relevance Score of '4' for Financial Transparency due to limited record of audited financial statements and publication timeliness, which has a negative impact on the credit profile, and is relevant to the rating[s] in conjunction with other factors. State Enterprise Navoiyuran has an ESG Relevance Score of '4' for Financial Transparency due to limited record of audited financial statements and publication timeliness, which has a negative impact on the credit profile, and is relevant to the rating[s] in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- State Enterprise Navoiyuran LT IDR BB Upgrade BB- senior unsecured LT BB New Rating RR4 BB-(EXP) JSC Almalyk Mining and Metallurgical Complex LT IDR BB Upgrade BB- JSC Navoi Mining and Metallurgical Company LT IDR BB Upgrade BB- senior unsecured LT BB Upgrade RR4 BB- JSC Uzbekneftegaz LT IDR BB Upgrade BB- senior unsecured LT BB Upgrade RR4 BB- ========= S P A I N ========= DORNA SPORTS: S&P Assigns 'BB' Long-Term ICR, Outlook Stable ------------------------------------------------------------ S&P Global Ratings assigned its 'BB' long-term issuer credit rating to Dorna Sports SL. At the same time, we assigned our 'BB' issue rating to Dorna's EUR975 million term loan B (TLB), with recovery ratings at '3' (65% recovery prospects). Dorna's EUR100 million revolving credit facility (RCF) and EUR150 million term loan A (TLA) are unrated. The stable outlook reflects S&P's view that Dorna will successfully roll-out its growth strategy in the medium term such that leverage should reduce below 4x, with FOCF to debt remaining comfortably above 10% in 2026.The outlook also is based on its view of that LMC, Dorna's parent, will maintain its current credit quality. On July 3, 2025, Liberty Media Corp. (LMC) completed the acquisition of 84% of MotoGP rights holder Dorna Sports SL (Dorna) with MotoGP management retaining 16% of the business. Dorna's sound business model benefits from revenue visibility and high profitability. Dorna's business risk profile is largely supported by the exclusive nature of Dorna's agreement with the Fédération Internationale de Motocyclisme (FIM) for rights until 2060 to organize all motorcycle competitions in which race time is below three hours, which includes the company's main competition event, MotoGP. This exclusive agreement acts as a barrier to entry, alongside MotoGP's loyal fan base, limiting the potential for new competitors or rival championships with similar formats to MotoGP. Moreover, Dorna benefits from significant revenue visibility from the contractual nature of its long-term race promotion, TV media rights, and sponsorship contracts, which represented about 90% of Dorna's total revenue in 2024. Dorna has relationships with 22 race promoters with five-to-10-year contracts, 117 media partners with three-to-five-year contracts, and 38 sponsors, with one-to five-year contracts. Dorna is also supported by the asset-light nature of its business model, given Dorna does not own the circuits in its schedule. By entering long-term contracts with race promoters, instead of owning the circuits, promoters pay Dorna fees to host and organize the different races in the calendar. This allows Dorna to maintain business flexibility and variable cost structure, leading to significant profitability. S&P said, "We think Dorna's size and scope outside Europe is, however, limited. We view Dorna is still relatively small compared with its closest peer Delta Topco Ltd. (Formula One), which is also owned by LMC. As of 2024, Formula One's S&P Global Ratings-adjusted EBITDA was over 5x that of Dorna. The company is also limited by its scope of revenue to Europe, which represents about 80% of TV media rights revenue and just over 50% of race promotion revenue. This is driven by MotoGP's schedule concentration in Europe with 14 out of 22 calendar races set in the region (including four races in Spain and two in Italy). Revenue concentration in Europe, especially in Spain and Italy, is also exacerbated by the fact that 15 out of the 22 MotoGP drivers are either Spanish or Italian, implying a substantial fan base from either of these two countries. "We expect Dorna to continue to grow and expand its business and global footprint in the medium term under its new ownership. Although EBITDA decreased significantly to EUR153 million in 2024 from EUR193 million in 2023, with S&P Global Ratings-adjusted EBITDA margin contracting to 33.1%, from 39.9% in the same period, we see this as a one-off event due to the race cancellations in Kazakhstan and India, related to issues with the race promoters, and in Valencia (Spain) due to flooding that occurred in the third quarter of 2024. The 2025 calendar includes 22 races from the 20 races in 2024, with solid replacements for the Kazakhstan and India races in the Czech Republic and Hungary and the recovery of the Argentina race in the calendar. This expanded race calendar should support, alongside higher circuit revenue from expected higher attendance, S&P Global Ratings-adjusted EBITDA recovery and expansion toward EUR190 million in 2025 and above EUR205 million in 2026, which translates to adjusted EBITDA margins of about 37% and 38%, respectively. We understand the growth strategy under the new ownership will focus on increasing MotoGP's global footprint and fanbase, as well as diversifying the company's revenue streams, as has been the case for Formula One since LMC acquired it in 2017." Dorna's significant cash flow generation profile and growth will contribute to material deleveraging over our forecast period. Dorna's asset light business model results in relatively low capex and, in combination with the business' high profitability, result in significant generation of FOCF. S&P expects that Dorna will increase its FOCF to about EUR73 million in 2025 and above EUR100 million in 2026, from EUR65 million in 2024, driven by earnings growth. This FOCF generation, alongside our expected increase in Dorna's S&P Global Ratings-adjusted EBITDA, should lead to Dorna's leverage decreasing toward 4.5x in 2025 and below 4.0x in 2026 compared with 4.8x in 2024. S&P said, "We expect financial policy will be prudent, supporting expected deleveraging trend. We understand from Dorna's management and shareholders that the intention is to conduct a prudent financial policy with a net leverage target of 3x-4x supported by continued earnings growth and gross debt reduction. We do not forecast any shareholder distributions or acquisitions over the medium term. We also acknowledge the consistent track record of deleveraging at Formula One prior to the acquisition of Dorna by LMC, and we believe the same will apply to Dorna." LMC's credit quality is supportive of the rating. S&P said, "Our assessment of LMC's credit quality could be seen as a combination of Formula One and Dorna. It is our view that Formula One enhances the overall credit quality of the group due to its significantly greater size and global footprint in comparison to Dorna's, supported as well by a stronger financial profile. Therefore, we believe that LMC's overall credit quality, as well as Dorna's strategic importance to the overall group, sustains an issuer credit rating for Dorna that is above its SACP." The stable outlook reflects S&P's view that Dorna will reduce leverage toward 4.5x by the end of 2025 and below 4.0x in 2026 and generate FOCF to debt comfortably above 10% in 2025 and 2026, on the back of continued organic growth and adjusted EBITDA margins above 37%. The outlook also is based on our view that LMC, Dorna's parent, will maintain its current credit quality. A downgrade of Dorna would likely follow if LMC's credit quality materially deteriorated over the next 12 months. S&P said, "Although it would not result in a downgrade, we could revise down our assessment of Dorna's SACP if the company significantly underperformed our base case in such a way that this leads to S&P Global Ratings-adjusted debt to EBITDA of above 5.0x and FOCF to debt of below 5%." An upgrade of Dorna would likely follow LMC's credit quality materially improving over the next 12 months. Nevertheless, S&P could revise upward its assessment of Dorna's SACP if it saw consistent track record of adjusted leverage being below 4.0x with firm commitment to remaining below this level, while maintaining significant FOCF generation. =========== T U R K E Y =========== ALTERNATIFBANK AS: Fitch Affirms BB- LongTerm IDRs, Outlook Stable ------------------------------------------------------------------ Fitch Ratings has affirmed Alternatifbank A.S.'s Long-Term (LT) Foreign-Currency (FC) and LT Local-Currency (LC) Issuer Default Ratings (IDR) at 'BB-'. The Outlooks are Stable. Fitch has also affirmed the bank's Viability Rating (VR) at 'b'. Key Rating Drivers Support-Driven, Country Risks: Alternatifbank A.S.'s IDRs are driven by potential shareholder support, as reflected in its Shareholder Support Rating (SSR). Nonetheless, its LTFC IDR is constrained by Turkiye's Country Ceiling of 'BB-', while its LT Local-Currency (LC) IDR also considers country risks. The Stable Outlooks mirror those on the sovereign. The VR reflects the bank's limited franchise, high wholesale funding, fairly weak FC liquidity and core capitalisation buffers and below-sector profitability, but also adequate asset quality and funding profile underpinned by ordinary support from its parent. Shareholder Support Capped: Alternatifbank's SSR considers potential support from Qatar's The Commercial Bank P.S.Q.C. (CBQ), primarily reflecting reputational risks for its parent, but also its strategic importance, integration and role within the group. It is constrained by Turkiye's Country Ceiling of 'BB-'. Improving, but Challenging, Operating Environment: The normalisation of monetary policy has reduced near-term macro-financial stability risks and external financing pressures. However, recent political developments have led to increased financial market volatility, which, if sustained, could disrupt the disinflation and economic rebalancing processes. Banks remain exposed to high inflation, potential further Turkish lira depreciation, slowing economic growth and multiple macroprudential regulations, despite simplification efforts. Limited Franchise: Alternatifbank is a small Turkish bank with a limited franchise, servicing mainly corporate and commercial customers, with a strategy to increase its retail business gradually. The bank's market share is less than 1%, resulting in limited pricing power. Asset Quality Risks: The non-performing loans ratio remained stable, at 1.3%, at end-1Q25 relative to end-2024, reflecting still-strong collections and, to a lesser extent, write-offs, as well as still moderate inflows and high nominal growth (16%; sector: 10%). Stage 2 loans were 6% of gross loans (84% restructured). High concentrations, exposure to the higher-risk construction and real estate sector (12% of gross loans), including a large shopping mall exposure (about 4%), and high FC lending (49%) heighten credit risks. Fitch expects the non-performing loan (NPL) ratio to go up towards 2% by end-2026, amid slowing economic growth and still high lira rates. Below Sector Average Profitability: Operating profit improved but to a still weak 0.9% of risk-weighted assets (RWAs) in 1Q25 (sector: 4.7%), from 0.5% in 2024, driven by lower swap costs amid still rising lira cost of deposit funding and slightly lower loan yields. Fitch expects the bank's operating profit to improve slightly, towards about 1% of RWAs in 2025, and 1.5% in 2026, as lira interest rates decline and on higher loan volumes. Fee income should remain supportive, but performance remains sensitive to asset quality and regulatory developments. Only Adequate Core Capitalisation: The common equity Tier 1 (CET1) ratio decreased to 10.1% at end-1Q25 (end-2024: 11.5%), reflecting the tightening of forbearance on FC RWAs, credit growth and an operational RWA adjustment. Its total capital ratio of 20.1% at end-1Q25 was supported by additional Tier1 (AT1), which provide a partial hedge against lira depreciation. Its view of capitalisation considers ordinary support from CBQ, given its record of capital support since 2018 (including CET1 and AT1). Fitch expects Alternatifbank's CET1 ratio to decline, on high growth, to about 8% over the rating horizon. Wholesale Funding, Ordinary Support: Customer deposits comprised only 45% of non-equity funding at end-1Q25, reflecting high reliance on wholesale funding (55% of funding). As a result, the bank's loans/deposits ratio increased further, to a high 132% at end-1Q25 (end-2024: 124%). Fitch expects Alternatifbank's loans/deposits ratio to rise towards 150%, over the rating horizon as loan growth outpaces deposit growth. FC liquid assets covered 29% FC debt due within one year at end-1Q25. Its assessment considers ordinary support from CBQ. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A downgrade of Turkiye's sovereign rating or an increase in its view of government intervention risk would lead to a downgrade of Alternatifbank's SSR, leading to negative rating action on its LT IDRs. The bank's SSR is also sensitive to Fitch's view of the shareholder's ability and propensity to provide support. The bank's VR is sensitive to a weakening in the operating environment. The VR could also be downgraded due to an erosion of its core capitalisation, for example, due to asset quality weakening, if not offset by ordinary support from CBQ. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade A positive change in Turkiye's LT IDRs would likely lead to similar action on the bank's SSR and LT IDRs. An upward revision of the Country Ceiling could also lead to an upgrade of the bank's SSR and LT IDRs. A VR upgrade is primarily sensitive to a sustainable improvement in the bank's business profile and earnings performance, combined with the strength of capital and FC liquidity buffers, in the context of improving operating environment conditions. OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS Alternatifbank's Short-Term IDRs of 'B' are the only possible option mapping to the LT IDRs in the 'BB' category. The National Rating is underpinned by shareholder support and is in line with foreign-owned peers. OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES The Short-Term IDRs are sensitive to changes in its LT IDRs. The National Rating is sensitive to changes in Alternatifbank's LTLC IDR and its creditworthiness relative to that of other Turkish issuers. VR ADJUSTMENTS The operating environment score of 'b+' for Turkish banks is lower than the category implied score of 'bbb' due to the following adjustment reason: macroeconomic stability (negative). The adjustment reflects heightened market volatility, high dollarisation and high risk of FX movements in Turkiye. Public Ratings with Credit Linkage to other ratings Alternatifbank's ratings are linked to that of CBQ, its parent. ESG Considerations The ESG Relevance Score for Management Strategy of '4' reflects an increased regulatory burden on all Turkish banks. Management's ability across the sector to determine their own strategy and price risk is constrained by the regulatory burden and also by the operational challenges of implementing regulations at the bank level. This has a moderately negative impact on the banks' credit profiles and is relevant to the banks' ratings in combination with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Prior ----------- ------ ----- Alternatifbank A.S. LT IDR BB- Affirmed BB- ST IDR B Affirmed B LC LT IDR BB- Affirmed BB- LC ST IDR B Affirmed B Natl LT AA(tur) Affirmed AA(tur) Viability b Affirmed b Shareholder Support bb- Affirmed bb- ARAP TURK: Fitch Affirms 'B' LongTerm IDRs, Outlook Positive ------------------------------------------------------------ Fitch Ratings has affirmed Arap Turk Bankasi A.S.'s (ATB) Long-Term Foreign-Currency (LTFC) and Local-Currency (LTLC) Issuer Default Ratings (IDRs) at 'B' with Positive Outlooks. Fitch has also affirmed the bank's Viability Rating (VR) at 'b'. Fitch has upgraded ATB's National Rating to 'A-(tur)' from 'BBB(tur)', reflecting a strengthening in its creditworthiness relative to other Turkish issuers in LC, following improved earnings and adequate capitalisation buffers in an improving operating environment. The Positive Outlook reflects that on the bank's LTLC IDR. Key Rating Drivers VR Drives Ratings: ATB's IDRs are driven by its standalone creditworthiness, as reflected in its VR. The VR reflects the bank's exposure to the improving, but challenging, operating environment in Turkiye, its small niche franchise within trade finance and high balance sheet concentration. It also reflects stable but below sector average profitability, contained asset quality risks, adequate capitalisation and stable, but concentrated, funding. The Positive Outlooks on the IDRs are due to the improving operating environment in Turkiye, which should support the bank's overall better performance that could lead to a rating upgrade. Improving but Challenging Operating Environment: ATB's operations are concentrated in the improving but challenging operating environment in Turkiye. The normalisation of monetary policy has reduced macrofinancial stability risks and external financing pressures. However, recent political developments have led to increased financial market volatility, which, if sustained, could disrupt disinflation and economic rebalancing. Banks remain exposed to high inflation, potential further Turkish lira depreciation, slowing economic growth and multiple macroprudential regulations, despite simplification efforts. In addition, as a trade finance bank, ATB is also exposed to the negative effect of geopolitical risks in world trade in 2025, although Fitch expects trade finance banks to remain resilient. Small Trade Finance Bank: ATB is a small trade finance bank that specialises in facilitating trade between Turkiye and Libya, and, to a lesser extent, the Middle East and North Africa. It has close ties with its largest shareholder, Libyan Foreign Bank (LFB; 63%), which provides it with low-cost, FC funding. High Concentrations: The bank's underwriting standards compare well with Fitch-rated trade finance peers', although it faces risks from its single name concentration on and off-balance sheet. On-balance sheet lending is mainly in FC (end-1Q25: 79% of total loans) and is, therefore, sensitive to lira depreciation. Negligible Impairments: ATB's asset quality benefits from the short-term nature of the loan book and counter-guarantees by Turkish banks against a large proportion of its Libya country risk in its trade finance operations. The bank's non-performing assets ratio (NPA, which include on- and off-balance sheet risks, and represents a better indicator of asset quality) was negligible at end-1Q25. Asset-quality risks remain due to high FC lending and single-obligor concentration. Improving Profitability: Operating profit rose to 1.7% of risk-weighted assets at 3M25 - annualised (2024: 1.6%; 2023: 0.8%). This was largely driven by lending growth and an increase in net interest margins (NIM) as the bank used its new capital to extend TRY loans with higher yields. The bank's NIM remains above the sector average and benefits from low-cost FC funding from its parent. Capital Increase: The bank's common equity Tier 1 ratio increased to 19.8% at end-1Q25 (17% excluding forbearance), from 18.4% at end-2024, supported by the rise in its paid-up capital in 1Q25, to TRY2.6 billion from TRY440 million. ATB's paid-up capital was raised further, to TRY3.2 billion, in May 2025. The bank's capital is adequate for the risks it faces, including from lira depreciation, given that the majority of the balance sheet is in FC. High Parent Funding: ATB is mainly wholesale-funded (58% of funding at end-1Q25), similar to other trade finance banks. It relies heavily on FC funding from its parent, which accounts for about 30% of funding. The remainder is through (largely non-resident) customer deposits from Libyan clients. ATB is exposed to refinancing risk, given its high reliance on FC wholesale funding, although the short-term maturity profile of the loan book and trade finance exposures supports liquidity. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade ATB's VR and IDRs could be downgraded due to a weakening of its operating environment that could follow a sovereign downgrade, although this is not its base case. A substantial reduction in parent funding, prompting a large drop in the bank's FC liquidity, could also lead to a negative rating action. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade ATB's ratings could be upgraded following an upward revision of its operating environment score, provided that the bank maintains overall stable risk and financial profiles. OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS The bank's National Long-Term Rating of 'A-(tur)'/Positive reflects ATB's LC creditworthiness relative to other Fitch-rated Turkish issuers. The bank's 'B' Short-Term IDRs are the only possible option mapping to LT IDRs in the 'B' rating category. The bank's 'no support' Government Support Rating (GSR) reflects Fitch's view that support from the Turkish authorities cannot be relied upon, given the bank's small size and limited systemic importance. In addition, support from ATB'S shareholders, while possible, cannot be relied on. OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES The National Rating is sensitive to a change in the bank's creditworthiness in LC relative to that of other Turkish issuers. An upgrade of ATB's 'ns' GSR is unlikely given its limited systemic importance. VR ADJUSTMENTS The operating environment score of 'b+' for Turkish banks is lower than the category implied score of 'bbb' due to the following adjustment reason: macroeconomic volatility (negative), which reflects market volatility, high dollarisation and high risk of FX movements in Turkiye. The asset quality score of 'b' is below the category implied score of 'bb' due to the following adjustment reason: concentrations (negative). ESG Considerations ATB has an ESG Relevance Score for Management Strategy of '4', reflecting an increased regulatory burden on all Turkish banks. Management's ability across the sector to determine their own strategy and price risk is constrained by the regulatory burden and also by the operational challenges of implementing regulations at the bank level. This has a moderately negative impact on the banks' credit profiles and is relevant to the banks' ratings in combination with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Prior ----------- ------ ----- Arap Turk Bankasi A.S. LT IDR B Affirmed B ST IDR B Affirmed B LC LT IDR B Affirmed B LC ST IDR B Affirmed B Natl LT A-(tur) Upgrade BBB(tur) Viability b Affirmed b Government Support ns Affirmed ns BURGAN BANK: Fitch Affirms 'BB-' LongTerm IDRs, Outlook Stable -------------------------------------------------------------- Fitch Ratings has affirmed Burgan Bank A.S.'s (BBT) Long-Term Foreign-Currency (LTFC) and Local-Currency (LTLC) Issuer Default Ratings (IDRs) at 'BB-'. The Outlooks Are Stable. Fitch has also affirmed the bank's Viability Rating (VR) at 'b'. Key Rating Drivers Support-Driven IDRs: BBT's IDRs are driven by potential shareholder support from its parent Burgan Bank K.P.S.C. (BBK; A/Stable/bb), as reflected in its Shareholder Support Rating (SSR). However, its LTFC IDR is constrained by Turkiye's Country Ceiling of 'BB-', while its LTLC IDR considers Turkish country risks. The Stable Outlooks mirror that on the sovereign. BBT's 'b' VR reflects the bank's adequate earnings performance, reasonable asset quality and funding profile underpinned by ordinary support from its parent, despite high wholesale funding and fairly weak FC liquidity coverage. The VR also considers BBT's limited franchise and only adequate core capitalisation buffers that considers ordinary support. SSR Constrained: BBT's 'bb-' SSR considers potential support from BBK, reflecting primarily reputational risk, given common branding and legal commitments as well as the integration and support record. The SSR is constrained by Turkiye's Country Ceiling of 'BB-'. Improving but Challenging Operating Environment: The normalisation of monetary policy in Turkiye has reduced macrofinancial stability risks and external financing pressures. However, political developments have led to increased financial market volatility, which, if sustained, could disrupt disinflation and economic rebalancing. Banks remain exposed to high inflation, potential further Turkish lira depreciation, slowing economic expansion and multiple macroprudential regulations, despite simplification efforts. Small Domestic Franchise: BBT provides universal banking services in Turkiye with less than a 1% market share of total assets at end-1Q25, resulting in limited competitive advantages. The bank also actively invests in its digital offering to improve its access to the retail subsector and widen its customer base. Limited Growth: BBT's loan growth has lagged behind the sector over the past two years, as the bank has been de-risking its loan book through collections from its problem loans. The FX-adjusted increase in 1Q25 was 4.4%, below the sector average of 6.5%. The share of FC loans remains high, at 54%, despite limited new lending, as gross loan growth remains low. Asset Quality Risks: BBT's impaired loans/gross loans ratio has improved (end-1Q25: 1.8%; end-2024: 1.9%), driven by collections and limited new inflows. Stage 2 loans (9.3% of gross loans), concentration and FC lending (end-1Q25: 54%) raise asset-quality risks. Impaired loans reserve coverage is low (end-1Q25: 66%), reflecting reliance on collateral. Free provisions were 1.5% of gross loans. Fitch expects the impaired loans ratio to improve to 1.5% at end-2025, on the back of impaired loan resolutions, and to worsen, to about 2.0%, at end-2026. Adequate Profitability: The fall in BBT's operating profit/risk-weighted assets (RWAs) ratio to 2.6% in 1Q25 (sector: 4.7%), from 4.4% in 2024, was largely due to higher operating expenses, despite free provision reversals and widened net interest margins (NIMs; 1Q25: 6.7%, 2024: 5.9%). Performance remains sensitive to slower GDP growth, macroeconomic and regulatory developments, and asset-quality risks. Fitch expects the operating profit/RWAs ratio to remain around its current level at end-2025 and improve slightly in 2026. Only Adequate Core Capitalisation: BBT's common equity Tier 1 (CET1) ratio lowered slightly, to 10.5%, at end-1Q25 (end-2024: 12.8%), including a 90 basis point forbearance uplift, mainly due to tightening forbearances. Pre-impairment operating profit (1Q25: 3.2% of average gross loans, annualised), and free provisions (equal to 1.2% of RWAs) provide additional buffers. BBK has provided regular capital support to the bank since 2018. Fitch expects the CET1 ratio to improve, to about 12%, at end-2025, on the back of internal capital generation and free provision reversals. Its assessment also considers ordinary support from BBK. High Wholesale Funding; Ordinary Support: Deposits comprised only 51% of total non-equity funding at end-1Q25, including 39% in FC. Wholesale funding made up 49% of funding, but parent funding (20% of funding) mitigates risks. Fitch expects BBT's loans/deposits ratio to remain at about current levels at end-2025. FC liquid assets covered only 23% of FC debt due within one year at end-1Q25, net of BBK funding, as the bank shifted its FC funding focus from costly FC deposits to borrowing from third parties, considering pricing advantages. Its assessment also considers ordinary support from BBK. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A downgrade of Turkiye's sovereign rating or an increase in government intervention risk would lead to a downgrade of BBT's SSR, leading to negative rating action on its LT IDRs. BBT's SSR is also sensitive to its view of the bank's shareholder's ability and propensity to provide support. The bank's VR is sensitive to a weakening in the operating environment The VR could also be downgraded due to erosion of core capitalisation, for example, due to asset-quality weakening, if not offset by ordinary support from the parent. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade An upgrade of the bank's LT IDRs and SSR would require a sovereign rating upgrade. An upward revision of Turkiye's Country Ceiling could also lead to an upgrade of the bank's SSR and LT IDRs. A VR upgrade is primarily sensitive to a sustainable improvement in the bank's business profile and earnings performance, combined with a strengthening of the bank's capital and FC liquidity buffers, in the context of improving operating environment conditions. OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS The bank's 'AA(tur)' National Rating is driven by shareholder support and is in line with foreign-owned peers' in Turkiye. The Short-Term IDRs of 'B' are the only possible option mapping to the LT IDRs in the 'BB' category. OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES The National Rating is sensitive to a change in the bank's LTLC IDR and a change in its creditworthiness relative to that of other Turkish issuers with a 'BB-' LTLC IDR. The Short-Term IDRs are sensitive to multi-notch changes in its LT IDRs. VR ADJUSTMENTS The 'b+' operating environment score for Turkish banks is lower than the category implied score of 'bbb', due to the following adjustment reason: macroeconomic stability (negative). The adjustment reflects heightened market volatility, high dollarisation and high risk of FX movements in Turkiye. Public Ratings with Credit Linkage to other ratings BBT's ratings are linked to those of Burgan Bank K.P.S.C., its parent. ESG Considerations BBT has an ESG Relevance Score for Management Strategy of '4', reflecting an increased regulatory burden on all Turkish banks. Management's ability across the sector to determine their own strategy and price risk is constrained by the regulatory burden and also by the operational challenges of implementing regulations at the bank level. This has a moderately negative impact on banks' credit profiles and is relevant to banks' ratings in combination with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Prior ----------- ------ ----- Burgan Bank A.S. LT IDR BB- Affirmed BB- ST IDR B Affirmed B LC LT IDR BB- Affirmed BB- LC ST IDR B Affirmed B Natl LT AA(tur) Affirmed AA(tur) Viability b Affirmed b Shareholder Support bb- Affirmed bb- IZMIR METROPOLITAN: Fitch Affirms BB- Long-Term IDR, Outlook Stable ------------------------------------------------------------------- Fitch Ratings has affirmed Izmir Metropolitan Municipality's Long-Term Foreign and Local-Currency Issuer Default Ratings (IDRs) at 'BB-' with Stable Outlooks. Fitch has revised the Outlook on Izmir's National Rating to Negative from Stable based on peer comparison and affirmed the rating at 'AAA(tur)'. The affirmation of the IDRs reflects Fitch's expectations that Izmir's operating performance will remain resilient, despite a highly inflationary operating environment, further lira depreciation and ongoing pressure in opex and increased debt financing due to investments under Fitch's rating case. Its debt metrics will remain commensurate with its peers with a 'bbb-' Standalone Credit Profile (SCP) over the medium term. Izmir's IDRs are capped by the Turkish sovereign's 'BB-' IDRs and the Stable Outlooks reflect that on the sovereign. The revision of the Outlook on the National Long-Term rating reflects its assessment that its debt metrics will likely deteriorate over the medium term relative to its 'AAA(tur)' national peers This is driven by ongoing pressure on operating spending stemming from collective labor agreements that have surpassed expected inflation, and increased hiring—mainly within municipal companies—during the pre-election cycle and the settlement of the overdue payables related to social security contributions of the municipal companies' staff in addition to high inflationary environment. The pressure on operating balance together with, higher debt from investments is reflected in a projected payback ratio of 3.9x in 2029, up from 2.8x in its previous scenario. KEY RATING DRIVERS Risk Profile: 'Weaker' Izmir's 'Weaker' risk profile reflects two 'Midrange' key rating factors and four 'Weaker' factors. Revenue Robustness: 'Midrange' Izmir has a well-diversified, buoyant local economy. GDP per capita is 19% above the national median, leading to a stable tax revenue base and robust tax revenue growth prospects, making it resilient to economic slowdown. Fitch expects tax revenues, which comprise about 80% Izmir's operating revenue, to have strong growth, at least in line with national nominal GDP growth in 2025-2029. Fitch expects Izmir's operating revenue to increase beyond the expected national nominal GDP growth of 18% to about TRY115.9 billion by 2029 from TRY42.0 billion in 2024, leading to robust operating margins averaging about 27% for 2025-2029, although down from 43% in 2020-2024. Revenue Adjustability: 'Weaker' Izmir's ability to generate additional revenue is constrained by nationally pre-defined tax rates. At end-2024, nationally set and collected taxes comprised 79% of its total revenue. Local taxes over which Izmir has control were a low 0.2% of total revenue, implying negligible tax flexibility, which is also constrained by central government limits. This is partly compensated by fees and charges levied on public services over which Izmir has some flexibility and by its scope for asset sales. These accounted for 6.3% and 0.3%, respectively, of total revenue in 2024. Expenditure Sustainability: 'Weaker' Izmir's moderately cyclical to countercyclical spending responsibilities help it adapt to local economic cycles. High inflation drove opex (CAGR: 62.4%) outpacing operating revenue (CAGR: 53.9%) in 2020-2024, but lower capex growth kept totex in line with revenue growth. Fitch expects ongoing increases in staff costs due to above-inflation wage increases for municipal companies together with persistent high inflation, will limit control of opex. Fitch also expects Izmir to continue providing large subsidies to its loss-making transport company, ESHOT, as cost increases cannot be fully offset by fares. Fitch expects capex, which is focused on metro line extension, to average 31% of totex in the rating case and to further limit cost control, amid high inflation. Fitch expects recent cost-cutting measures by the central government and an expected decline in inflation and the settlement of overdue payables from 2027 will help Izmir regain control over expenditure growth. Expenditure Adjustability: 'Midrange' Izmir has a low share of fixed costs, averaging 55% of totex compared with 70%-90% for international peers, leading to stronger spending flexibility. This is offset by Izmir's weak record of balanced budgets due to large swings in capex in pre-election periods and its limited ability to cut costs given existing services and low investment. Fitch expects Izmir to continue post a high deficit before financing, averaging 14% of revenue due to high investment needs and inflationary pressures on opex (10% in 2020-2024). Fitch expects high inflation together with ongoing pressures in opex due to staff costs from municipal companies and Izmir's capital-intensive metro line investment to limit spending flexibility, before a gradual improvement from 2027 as inflation declines and overdue payables are settled. Liabilities & Liquidity Robustness: 'Weaker' Izmir faces significant FX risk, as nearly 79% of its debt is in euros. The average life of its debt at 3.3 years and fully amortising bank loans mitigate annual debt-servicing pressure. Most of its loans are at fixed interest rates (61%), resulting in negligible interest-rate risk. Refinancing pressure is further mitigated by Izmir's strong operating balance covering an average 1.7x of its annual debt service. The municipality is not exposed to material off-balance-sheet risks. Contingent liabilities mostly comprise the borrowing of its water affiliate, IZSU, which is self-sustaining, underpinned by its robust payback ratio at 2.5x. Liabilities & Liquidity Flexibility: 'Weaker' The counterparty risk as Izmir's domestic liquidity providers are rated below 'BBB-' and short tenor of loans limit its assessment to 'Weaker', similar to its national peers. Izmir had cash of TRY1,479 million at end-2024 down from TRY1,866 million in 2023, but it remains restricted as it is earmarked for the settlement of payables. However, Izmir has good access to international financial markets. In 2025, it attracted TRY10.9 billion in undrawn committed credit facilities from national lenders. Turkish local and regional governments do not benefit from treasury lines or cash-pooling, making it challenging for them to fund unexpected increases in debt liabilities or spending. Financial Profile: 'aaa category' Fitch assesses Izmir's financial profile in the 'aaa' category. Buoyant tax revenue growth will drive the operating revenue towards TRY115.9 billion, supported by expected real nominal GDP growth of 3.5% and average inflation of 21%. However, Fitch expects the operating margin to remain under pressure over 2025-2029, averaging around 27% due to persistent high inflation, although declining from an average 43% in 2020-2024. Under Fitch's rating case for 2025-2029, Izmir's operating balance will be about TRY29.2 billion with direct debt of TRY113.6 billion in 2029, leading to a robust debt payback ratio (net adjusted debt/operating balance) at 3.9x, in line with a 'aaa' financial profile This is further supported by a robust actual debt service coverage ratio at 1.5x in 2029. The fiscal debt burden (net adjusted debt to operating revenue) remains below 100%, in line with a 'aa' financial profile. Derivation Summary Izmir's 'bbb-' SCP results from a 'Weaker' risk profile and a 'aaa' financial profile. The SCP also factors in Izmir's comparison with its national and international peers in the same rating category. Izmir's IDRs are not affected by any other rating factors but are capped by the Turkish sovereign IDRs (BB-/Stable). Izmir's national and international peers all have 'Weaker' risk profiles and SCPs varies primarily based on their leverage metrics. Izmir's SCP factors comparison with national and international peers in the same rating category. Its payback ratio is at the lower end of the 'aaa' category, like Mersin Metropolitan Municipality (BB-/Stable; bbb- SCP), Konya Metropolitan Municipality (BB-/Stable; bb+ SCP) and Yerevan City (BB-/Stable; bbb- SCP) and slightly above Istanbul Metropolitan Municipality (BB-/Stable; bbb- SCP). Compared with Konya, Izmir has solid debt service coverage above 1.5x over the scenario horizon while Konya's coverage is below 1.0x. Izmir's SCP is at the low end of the 'bbb' category at 'bbb-' compared with Ankara Metropolitan Municipality (BB-/Stable; bbb SCP) and City of Almaty (BBB/Stable; bbb+ SCP) and is in line with the 'bbb-' SCPs of Mersin, Istanbul and Yerevan City. Short-Term Ratings The 'B' Short-Term IDR is the only option for a 'BB-' category Long-Term IDR. National Ratings Izmir's National Rating is derived from its Long-Term Local-Currency IDR, which maps to 'AAA(tur)' on the Turkish National Correspondence Table based on peer comparison. The Outlook has been revised to Negative from Stable, reflecting a payback ratio that is now closer to the 5.0x threshold and a deterioration of debt metrics over the medium term relative to its 'AAA(tur)'national peers. Key Assumptions Qualitative Assumptions: Risk Profile: 'Weaker' Revenue Robustness: 'Midrange' Revenue Adjustability: 'Weaker' Expenditure Sustainability: 'Weaker' Expenditure Adjustability: 'Midrange' Liabilities and Liquidity Robustness: 'Weaker' Liabilities and Liquidity Flexibility: 'Weaker' Financial Profile: 'aaa' Asymmetric Risk: 'N/A' Support (Budget Loans): 'N/A' Support (Ad Hoc): 'N/A' Rating Cap (LT IDR): 'BB-' Rating Cap (LT LC IDR) 'BB-' Rating Floor: 'N/A' Quantitative assumptions - Issuer Specific Fitch's through-the-cycle rating case incorporates a combination of revenue, cost and financial risk stresses. It is based on 2020-2024 published figures and its expectations for 2025-2029: - Operating revenues CAGR of 22.5% in 2025-2029 (53.9% year on year for 2020-2024) due to expected high but declining nominal GDP growth of about 18% on average in 2025-2029 - Tax revenue CAGR of 22.5% in 2025-2029 (53.7% in 2020-2024) - Current transfers CAGR of 21.6% in in 2025-2029 (60.8% in 2020-2024) - Opex CAGR of 25.6% in 2025-2029 (62.4% year on year for 2020-2024) due to expected high but declining inflation of about 21% on average in 2025-2029 - Negative net capital balance of TRY31.0 billion in 2025-2029 - Apparent cost of debt on average 9.6%, above the average cost of debt in 2020-2024 based on increased local currency borrowing - Average USD/TRY assumptions based on Fitch's sovereign estimate for 2025 at USD/TRY43, 2026 at USD/TRY48, 2027 at USD/TRY53 and with an annual additional depreciation of 10% for 2028-2029 Issuer Profile Izmir is the third-largest city in Turkiye with 5.3% of the national population. Izmir has a well-diversified and buoyant local economy dominated by the services sector (57%), followed by industry (38%) and agriculture (5%). Izmir's economy constitutes 6.1% of Turkiye's economic output. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A downgrade of Turkiye's sovereign's IDRs or a downward revision of Izmir's SCP resulting from a weaker debt payback of more than 9x on a sustained basis would lead to a downgrade of Izmir's IDRs. The National Long-Term rating could be downgraded if its financial profile deteriorates on a sustained basis over the rating case in line with 'AA+(tur)' rated peers. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade An upgrade of the Turkish sovereign IDRs would lead to similar action on Izmir's IDRs, provided that Izmir maintains its debt payback ratio below 5x. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Discussion Note Committee date: 08 July 2025 There was an appropriate quorum at the committee and the members confirmed that they were free from recusal. It was agreed that the data was sufficiently robust relative to its materiality. During the committee no material issues were raised that were not in the original committee package. The main rating factors under the relevant criteria were discussed by the committee members. The rating decision as discussed in this rating action commentary reflects the committee discussion. Public Ratings with Credit Linkage to other ratings Izmir's IDRs are capped by Turkiye's sovereign IDRs. Entity/Debt Rating Prior ----------- ------ ----- Izmir Metropolitan Municipality LT IDR BB- Affirmed BB- ST IDR B Affirmed B LC LT IDR BB- Affirmed BB- LC ST IDR B Affirmed B Natl LT AAA(tur) Affirmed AAA(tur) MANISA METROPOLITAN: Fitch Affirms BB- LongTerm IDR, Outlook Stable ------------------------------------------------------------------- Fitch Ratings has affirmed Manisa Metropolitan Municipality's Long-Term Foreign and Local-Currency Issuer Default Ratings (IDRs) at 'BB-' with Stable Outlooks. The affirmation reflects Fitch's unchanged view that Manisa will maintain a robust operating balance despite high inflation, although capex-driven debt will increase under the rating case. This is based on its Standalone Credit Profile (SCP), which Fitch has revised to 'bbb' from 'bbb-'and a cap at Turkiye's sovereign ratings (BB-/Stable). The SCP revision reflects an improvement in its financial profile with payback ratio at 1.5x in 2029 at the upper end of 'aaa' assessment and a stronger coverage ratio in the 'aa' category compared with national and international peers in the same rating category. KEY RATING DRIVERS Risk Profile: 'Weaker' Manisa's 'Weaker' risk profile reflects two 'Midrange' key rating factors and four 'Weaker' factors. Revenue Robustness: 'Midrange' Manisa benefits from a dynamic tax base supported by a diversified and industrialised local economy, resulting in a tax revenue structure with low volatility and sound growth prospects. Fitch projects tax revenue growth will slightly exceed anticipated national nominal GDP CAGR of 18% over 2025-2029. Robust tax revenue growth prospects reflected by tax revenue CAGR of 60.1% in 2020-2024, above national nominal GDP CAGR of 58.8% during the same period. Taxes represent about 65% of operating revenue and their growth should drive operating revenue towards TRY21.9 billion by 2029 (2024: TRY8.3 billion) under Fitch's rating case. Revenue Adjustability: 'Weaker' Manisa's ability to generate additional revenue is constrained by nationally pre-defined tax rates. At end-2024, nationally set and collected taxes comprised 62% of Manisa's total revenue. Local taxes, over which Manisa has tax autonomy, made up a low 0.2% of total revenue, implying negligible tax flexibility, further constrained by ceilings set by the central government. Tax-setting inflexibility is partly compensated by fees and charges levied on public services over which Manisa has some flexibility and by its scope for asset sales. These accounted for 7.2% and 1.2%, respectively, of Manisa's total revenue in 2024. Expenditure Sustainability: 'Weaker' Moderately cyclical to countercyclical spending responsibilities allow Manisa to adapt spending to local economic cycles. Manisa managed to report surpluses before financing over the past five years, despite opex (CAGR 60.8%) rising faster than operating revenues (CAGR: 56.7%) in 2020-2024. However, Fitch expects persistently high inflation to challenge Manisa's control over totex, with opex growth outpacing operating revenue growth by around 5% in its rating case. However, recent cost-cutting measures by the central government and the expected decline in inflation from 2026 should help Manisa regain control of expenditure growth. Expenditure Adjustability: 'Midrange' Manisa has a low share of inflexible costs compared with international peers, averaging 60% of its totex, compared with 70%-90% for international peers Stronger spending flexibility is supported by Manisa's improved record of balanced budgets as demonstrated by consistent surpluses before financing in the last five years. Fitch expects Manisa to spend an average TRY7.3 billion annually on investments for the next five years or 38% of totex, focused on basic infrastructure investments, mainly for road construction and maintenance. However, spending flexibility is limited by modest current services and investments, as well as high inflation, which constrain the city's ability to reduce investment outlays. Liabilities & Liquidity Robustness: 'Weaker' Manisa has moderate unhedged foreign-exchange risk with a euro-denominated loan accounting for 35% of its total debt below the sector average of 60%. Most of its loans are at fixed interest rates, resulting in negligible interest-rate risk. However, the very short weighted average life of debt at 1.8 years results in material refinancing risk. This is partly offset by Manisa's sound actual debt service coverage ratio of 10.0x in 2024, the amortising nature of its bank loans, and low indebtedness, supported by its net cash position at end-2024. Manisa is not exposed to material off-balance sheet risk and its contingent liabilities comprise the borrowings of its water and sewage affiliate, MASKI (TRY0.7 billion) which Fitch regards as a self-sustaining utility. This is supported by a debt service coverage ratio above 1.2x in 2024. Liabilities & Liquidity Flexibility: 'Weaker' Counterparty risk associated with Manisa's domestic liquidity providers being rated below 'BBB-' and the short tenor of its loans limit its assessment to 'Weaker', similar to other Turkish local and regional governments. At end-2024, Manisa's unrestricted cash reserves, net of receivables minus payables, improved to TRY657 million, up from TRY49 billion in 2024. Turkish local and regional governments do not benefit from treasury lines or national cash-pooling, making it challenging to fund unexpected increases in liabilities or spending peaks. Financial Profile: 'aaa category' Fitch assesses Manisa's financial profile in the 'aaa' category. Tax revenues will drive growth of operating revenues towards TRY21.9 billion, supported by expected real nominal GDP growth of 3.5% and average inflation of 21%. Under Fitch's rating case for 2025-2029, Manisa's operating balance will be about TRY6.2 billion with direct debt of TRY9.5 billion in 2029, leading to a strong debt payback ratio (net adjusted debt/operating balance) at 1.5x well below 5x, in line with a 'aaa' financial profile. This is supported by its forecast of a solid actual debt service coverage of 3.3x in 2029 (2024: 10.0x), corresponding to a 'aa' financial profile. This is despite an expected fall in the operating margin from an average 49% in 2020-2024 to 33% in 2025-2029. The fiscal debt burden (net adjusted debt to operating revenue) remains below 50%, in line with a 'aaa' financial profile. Derivation Summary Manisa's 'bbb' SCP results from a 'Weaker' risk profile and a 'aaa' financial profile. The SCP also factors in Manisa's comparison with national and international peers in the same rating category. Manisa's IDRs are not affected by any other rating factors but are capped by Turkiye's sovereign IDRs. Manisa's national peers all have 'Weaker' risk profiles and their SCPs vary, primarily reflecting differences in their leverage ratios. The SCP is in the middle of the 'bbb' category, supported by a strong payback ratio at 1.5x in the 'aaa' category and an actual debt service coverage ratio at 3.3x in the 'aa' category. Manisa's strong payback ratio is similar to international peers such as the City of Almaty (Kazakhstan), and the State of Parana (Brazil). Its SCP is in line with State of Parana (BB/Stable; bbb SCP), Ankara Metropolitan Municipality (BB-/Stable; bbb SCP) and above that of Antalya Metropolitan Municipality (BB-/Stable; bbb- SCP) and Bursa Metropolitan Municipality(BB-/Stable; bbb- SCP) , reflecting its stronger coverage and a payback ratio at the upper end of the 'aaa' category. Short-Term Ratings The 'B' Short-Term IDR is the only option for a 'BB-' Long-Term IDR. National Ratings Manisa's National Ratings are driven by its Long-Term Local-Currency IDR, which is mapped to the highest level of 'AAA(tur)' on the Turkish National Rating Correspondence Table based on a peer comparison. The Outlook is Stable. Key Assumptions Qualitative assumptions: Risk Profile: 'Weaker' Revenue Robustness: 'Midrange' Revenue Adjustability: 'Weaker' Expenditure Sustainability: 'Weaker' Expenditure Adjustability: 'Midrange' Liabilities and Liquidity Robustness: 'Weaker' Liabilities and Liquidity Flexibility: 'Weaker' Financial Profile: 'aaa' Asymmetric Risk: 'N/A' Support (Budget Loans): 'N/A' Support (Ad Hoc): 'N/A' Rating Cap (LT IDR): 'BB-' Rating Cap (LT LC IDR) 'BB-' Rating Floor: 'N/A' Quantitative assumptions - Issuer Specific Fitch's through-the-cycle rating case incorporates a combination of revenue, cost and financial risk stresses. It is based on 2020-2024 published figures and its expectations for 2025-2029: - Operating revenues CAGR of 21.3% in 2025-2029 (56.7% year on year for 2020-2024) due to expected high but declining nominal GDP growth of about 18% on average in 2025-2029 - Tax revenue CAGR of 21.5% in 2025-2029 (60.1% in 2020-2024) - Current transfers CAGR of 20.8% in in 2025-2029 (59.7% in 2020-2024) - Operating expenses CAGR of 26.8% in 2025-2029 (60.8% year on year for 2020-2024) due to expected high but declining inflation of about 21% on average in 2025-2029 - Negative net capital balance of TRY7.2 billion in 2025-2029 - Apparent cost of debt on average 18.5%, above the average cost of debt in 2024 based on the increased borrowing rates - Average USD/TRY assumptions based on Fitch's sovereign estimate for 2025 at USD/TRY43, 2026 at USD/TRY48, 2027 at USD/TRY53 and with an annual additional depreciation of 10% for 2028-2029. Issuer Profile Manisa has a population of nearly 1.5 million, 1.7% of Turkiye's. It is the second-largest industrial and trade hub in the Aegean. Its GDP per capita in 2023 with a buoyant local economy dominated by the industry (52%), followed by industry (35%) and agriculture (14%). Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A downgrade of Turkiye's sovereign IDRs or a downward revision of Manisa's SCP resulting from a debt payback of more than 9x on a sustained basis would lead to a downgrade of the IDRs. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade An upgrade of Turkiye's sovereign IDRs would lead to similar rating action on Manisa's IDRs, provided it maintains its debt payback ratio below 5x. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Discussion Note Committee date: 08 July 2025 There was an appropriate quorum at the committee and the members confirmed that they were free from recusal. It was agreed that the data was sufficiently robust relative to its materiality. During the committee no material issues were raised that were not in the original committee package. The main rating factors under the relevant criteria were discussed by the committee members. The rating decision as discussed in this rating action commentary reflects the committee discussion. Public Ratings with Credit Linkage to other ratings Manisa's IDRs are capped by Turkiye's sovereign IDRs. Entity/Debt Rating Prior ----------- ------ ----- Manisa Metropolitan Municipality LT IDR BB- Affirmed BB- ST IDR B Affirmed B LC LT IDR BB- Affirmed BB- LC ST IDR B Affirmed B Natl LT AAA(tur) Affirmed AAA(tur) MERSIN METROPOLITAN: Fitch Affirms BB- LongTerm IDR, Outlook Stable ------------------------------------------------------------------- Fitch Ratings has affirmed Mersin Metropolitan Municipality's Long-Term Foreign and Local-Currency Issuer Default Ratings (IDRs) at 'BB-' with Stable Outlooks. The affirmation reflects Fitch's unchanged view that Mersin will maintain a robust operating balance despite high inflation, although debt will substantially increase due to investments and lira depreciation under Fitch's rating case. Mersin's debt metrics will remain commensurate with a 'bbb-' Standalone Credit Profile (SCP) over the medium term. The IDRs are capped by Turkiye's sovereign's IDRs (BB-/Stable) and the Stable Outlooks reflect that on the sovereign. KEY RATING DRIVERS Risk Profile: 'Weaker' Mersin's 'Weaker' risk profile reflects two 'Midrange' key rating factors and four 'Weaker' factors. Revenue Robustness: 'Midrange' Mersin's tax revenue base is diversified, supported by its trade- and manufacturing-driven local economy. The diversification leads to less volatile tax revenue and buoyant growth prospects. Fitch expects growth to exceed Turkiye's nominal GDP CAGR of 18% for 2025-2029. This is evidenced by Mersin's 62.8% tax revenue CAGR in 2020-2024, exceeding the national nominal GDP CAGR of 58.8% during the same period. Tax revenue should drive operating revenue towards TRY41.9 billion in 2029 from TRY14.7 billion in 2024, supporting its operating balance under its rating case. Tax revenue represented around 70% of operating revenue on average in 2020-2024. Revenue Adjustability: 'Weaker' Mersin's ability to generate additional revenue is constrained by nationally pre-defined tax rates. At end-2024, nationally set and collected taxes comprised 72% of total revenue. Local taxes, over which Mersin has tax autonomy, made up a low 0.2% of total revenue, implying negligible tax flexibility and constrained by ceilings set by the central government. Tax-setting inflexibility is partly compensated by fees and charges levied on public services over which Mersin has some flexibility and by its scope for asset sales. These accounted for 7.9% and 0.4%, respectively, of Mersin's total revenue in 2024. Expenditure Sustainability: 'Weaker' Fitch expects the persistent high inflationary operating environment to erode expenditure control despite Mersin's moderately cyclical and counter-cyclical responsibilities. Mersin's opex growth outpaced operating revenue growth by 4% in 2020-2024, resulting in recurring deficits before financing over the past four years. Fitch expects these pressures to persist, with low operating margins continuing over the rating horizon. Mersin has a capital-intensive investment programme over the next five years, with an emphasis on metro line projects. Combined with high inflation, this will further limit Mersin's capacity to control its spending. Fitch expects recent cost-cutting measures introduced by the central government, and the expected decline in inflation from 2026, to help Mersin regain some control of expenditure growth. Expenditure Adjustability: 'Midrange' Mersin has a relatively low share of inflexible costs compared with international peers, averaging 70% of total expenditure. However, stronger spending flexibility is counterbalanced by a weak record of balanced budgets, due to large swings in capex and moderate affordability for cuts, given modest existing public services and investments. Mersin will invest TRY8.4 billion annually in infrastructure in the next five years and capex will remain at about 23% of total spending under its rating case. This will contribute to large budget deficits before financing on average at close to 11% of total revenue for 2025-2029 compared with 8% over 2020-2024. Liabilities & Liquidity Robustness: 'Weaker' The significant Turkish lira volatility exposes Mersin to considerable FX risk, with nearly 30% of its total debt in euros and unhedged. Mersin's debt has a fairly short weighted-average life at 2.1 years, increasing refinancing risk. This is mitigated by its fully amortising nature of bank loans and an actual debt service coverage ratio that remains at least 1.5x under Fitch's rating case. Fitch also expects new FX loans to extend the average maturities of its existing debt stock. Interest-rate risk is mitigated as most of Mersin's bank loans were at fixed rates as of end-2024. The municipality is not exposed to material off balance sheet risk. Contingent liabilities (TRY 1.2 billion) are moderate and stem solely from its water affiliate, MESKI, which is self-sustaining. MESKI's borrowing will continue to increase due to its new investments, but Fitch expects the company to service its debt with its own cash flow. In 2024, MESKI reported a resilient operating balance, leading to a payback ratio below 1.0x. Liabilities & Liquidity Flexibility: 'Weaker' Mersin's counterparty risk stems from domestic liquidity providers rated below 'BBB-', which coupled with the short tenor of loans, limits its assessment to 'Weaker', like Turkish peers. Mersin's year-end available cash at end-2024 was fully restricted for payables settlement. It has a good record of accessing national lenders and is improving relationships with international lenders. Turkish local and regional governments do not benefit from treasury lines or national cash-pooling, making funding unexpected increases in debt liabilities or spending peaks challenging. Financial Profile: 'aaa category' Fitch assesses Mersin's financial profile in the 'aaa' category. Fitch projects operating revenue will reach TRY41.9 billion by 2029, driven by tax revenues and supported by expected average real GDP growth of 3.5% and average inflation of 21%. However, Fitch expects the operating margin to remain under pressure over 2025-2029, averaging around 17% in its rating case due to continued inflationary pressures. Under Fitch's rating case, Mersin's operating balance will be about TRY6.0 billion and its direct debt TRY24.8 billion in 2029 (up from TRY1.5 billion in 2024), leading to a payback ratio (net adjusted debt/operating balance) at 4.1x, in line with a 'aaa' financial profile. Fitch expects Mersin's actual debt service coverage ratio to decline to 1.5x by 2029 but still remain resilient corresponding to 'a' category. The fiscal debt burden (net adjusted debt/operating revenue) remains below 100% in the 'aa' category. Derivation Summary Mersin's 'bbb-' SCP results from a 'Weaker' risk profile and a 'aaa' financial profile. The SCP also factors in Mersin's comparison with national and international peers in the same rating category. Mersin's IDRs are capped by the Turkish sovereign's IDRs and are not affected by any other rating factors. Mersin's national and international peers all have 'Weaker' risk profiles, and their SCPs vary primarily based on their leverage metrics. Mersin's SCP factors in comparison with national and international peers in the same rating category. Its payback ratio is at the lower end of the 'aaa' category, similar to Izmir Metropolitan Municipality (BB-/Stable; bbb- SCP), Konya Metropolitan Municipality (BB-/Stable; bb+ SCP) and Yerevan City (BB-/Stable; bbb- SCP) and slightly above Istanbul Metropolitan Municipality (BB-/Stable; bbb- SCP). Mersin's SCP is at the low end of the 'bbb' category at 'bbb-', in line with Izmir, Istanbul and Yerevan City and below that of Ankara Metropolitan Municipality (BB-/Stable; bbb SCP). Short-Term Ratings The 'B' Short-Term IDR is the only option for a 'BB-' Long-Term IDR. National Ratings Mersin's National Ratings are driven by its Long-Term Local-Currency IDR, which is mapped to 'AA+(tur)' on the Turkish National Rating Correspondence Table based on a peer comparison. The Outlook is Stable. Key Assumptions Qualitative Assumptions: Risk Profile: 'Weaker' Revenue Robustness: 'Midrange' Revenue Adjustability: 'Weaker' Expenditure Sustainability: 'Weaker' Expenditure Adjustability: 'Midrange' Liabilities and Liquidity Robustness: 'Weaker' Liabilities and Liquidity Flexibility: 'Weaker' Financial Profile: 'aaa' Asymmetric Risk: 'N/A' Support (Budget Loans): 'N/A' Support (Ad Hoc): 'N/A' Rating Cap (LT IDR): 'BB-' Rating Cap (LT LC IDR) 'BB-' Rating Floor: 'N/A' Quantitative assumptions - Issuer Specific Fitch's through-the-cycle rating case incorporates a combination of revenue, cost and financial risk stresses. It is based on 2020-2024 published figures and its expectations for 2025-2029: - Operating revenues CAGR of 23.4% in 2025-2029 (59.6% year on year for 2020-2024 due to expected high but declining nominal GDP growth of about 18% on average in 2025-2029) - Tax revenue CAGR of 23.5% in 2025-2029 (62.8% in 2020-2024) - Current transfers CAGR of 22.6% in in 2025-2029 (57.2% in 2020-2024) - Opex CAGR of 24.1% in 2025-2029 (63.9% year on year for 2020-2024) due to expected high but declining inflation of about 21% on average in 2025-2029 - Negative net capital balance of TRY7.6 billion in 2025-2029 - Apparent cost of debt on average 15.1%, below the average cost of debt in 2024 based on the expected decline in policy rates and higher share of FX loans - Average USD/TRY assumptions based on Fitch's sovereign estimate for 2025 at USD/TRY43, 2026 at USD/TRY48, 2027 at USD/TRY53 and with an annual additional depreciation of 10% for 2028-2029 Issuer Profile Mersin is an important logistics hub with connections to the Middle East and the Black Sea and has a population of 2.0 million people, accounting for 2.3% of the total population. Mersin's GDP per capita in 2023 was TRY282,490, corresponding to 91% of the national average, with the gap closing to 9%, down from 13% in 2021. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A downgrade of Turkiye's sovereign's IDRs or a downward revision of Mersin's SCP, resulting from a debt payback of more than 9x on a sustained basis, would lead to a downgrade of the IDRs. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade An upgrade of Turkiye's sovereign IDRs would lead to an upgrade of Mersin's IDRs, provided it maintains its debt payback ratio below 5x. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Discussion Note Committee date: 08 July 2025 There was an appropriate quorum at the committee and the members confirmed that they were free from recusal. It was agreed that the data was sufficiently robust relative to its materiality. During the committee no material issues were raised that were not in the original committee package. The main rating factors under the relevant criteria were discussed by the committee members. The rating decision as discussed in this rating action commentary reflects the committee discussion. Public Ratings with Credit Linkage to other ratings Mersin's IDRs are capped by Turkiye's sovereign IDRs. Entity/Debt Rating Prior ----------- ------ ----- Mersin Metropolitan Municipality LT IDR BB- Affirmed BB- ST IDR B Affirmed B LC LT IDR BB- Affirmed BB- LC ST IDR B Affirmed B Natl LT AA+(tur) Affirmed AA+(tur) MUGLA METROPOLITAN: Fitch Affirms BB- Long-Term IDR, Outlook Stable ------------------------------------------------------------------- Fitch Ratings has affirmed Mugla Metropolitan Municipality's Long-Term Foreign and Local-Currency Issuer Default Ratings (IDRs) at 'BB-' with Stable Outlooks. The affirmation reflects Fitch's unchanged view that Mugla will maintain a robust operating balance despite high inflation, although capex-driven debt will increase under the rating case. Its debt metrics will remain commensurate with those of its peers with a 'bbb+' Standalone Credit Profile (SCP) over the medium term. Mugla's IDRs are capped by Turkiye's sovereign's IDRs ('BB-'/Stable) and the Stable Outlook reflects that on the sovereign. KEY RATING DRIVERS Risk Profile: 'Weaker' Mugla's 'Weaker' risk profile reflects three 'Midrange' key rating factors and three 'Weaker' factors. Revenue Robustness: 'Midrange' Mugla's local economy has benefited from increased tourist arrivals, which have rebounded to pre-pandemic levels. Growth is consistent with that before the pandemic, supporting low volatility of the tax revenue base. Taxes represent about two-thirds of Mugla's operating revenue. Fitch expects local nominal GDP CAGR of 23.7% over the medium term, exceeding national nominal GDP CAGR of 18%, driving operating revenue towards TRY19.1 billion in 2029 (2024: TRY6.7 billion). Robust tax revenue growth prospects, demonstrated by tax revenue CAGR of 62.5% during 2020-2024, outpacing national nominal GDP CAGR of 58.8% in the same period. Revenue Adjustability: 'Weaker' Mugla's ability to generate additional revenue is constrained by nationally pre-defined tax rates. At end-2024, nationally set and collected taxes were 60% of total revenue. Local taxes over which Mugla has tax autonomy were less than 1% of total revenue, implying negligible tax flexibility, which is also constrained by ceilings set by the central government. The inflexibility of tax-setting powers is compensated to some extent by the fees and charges over which Mugla has some control. This accounted for 4.4% of its total revenue. Expenditure Sustainability: 'Weaker' Moderately cyclical to countercyclical spending responsibilities allow Mugla to adapt spending to local economic cycles. Mugla managed to report surpluses before financing over the past five years, despite opex (CAGR 61.2%) rising faster than operating revenues (CAGR: 59.6%) in 2020-2024. Fitch expects persistent high inflation to continue weaken expenditure control, with opex outpacing operating revenue growth by around 3%. Fitch expects recent cost-cutting measures introduced by the central government, and the expected decline in inflation from 2026, to help Mugla regain some control over expenditure growth. Expenditure Adjustability: 'Midrange' Mugla has a low share of inflexible costs compared with international peers, at around 50% of its totex, compared with 70%-90% for international peers. Mugla also has a good record of balanced budgets, demonstrated by the surpluses produced before net financing in 2020-2024. Fitch expects Mugla to spend an average TRY7.6 billion annually on investments for the next five years or 47% of totex, focused on basic infrastructure investments, mainly for road construction and maintenance. However, spending flexibility is offset by the moderate affordability of reduction due to the existing level of services and investments as well as by high inflation. Liabilities & Liquidity Robustness: 'Midrange' Mugla has the lowest leverage among Fitch-rated national peers and has no unhedged FX exposure. Debt consists of Turkish lira-denominated bank loans with floating interest rates. Its very short weighted average life at 1.9 years results in material refinancing risk. This is offset by a strong actual debt service coverage ratio expected to remain above 6x in 2025-2029, and the amortising debt structure. Mugla has a net cash position, with unrestricted cash reserves remaining strong at TRY2.6 billion in 2024. Mugla is not exposed to material off-balance sheet risk and its contingent liabilities comprise borrowings of its water and sewage affiliate, MUSKI (TRY3.0 billion) which Fitch regards as a self-sustaining utility. This is supported by a strong debt service coverage ratio above 3.0x in 2024. Liabilities & Liquidity Flexibility: 'Weaker' Counterparty risk associated with Mugla's domestic liquidity providers being rated below 'BBB-' and the short tenor of its loans limit its assessment to 'Weaker', similar to other Turkish local and regional governments. Mugla's unrestricted cash reserves, net of receivables minus payables, improved to TRY2.6 billion in 2024 (2023: TRY2.1 billion). Mugla has well-developed relationships with local banks and developing relationships with international lenders. Turkish local and regional governments do not benefit from treasury lines or national cash-pooling, making it challenging to fund unexpected increases in debt liabilities or spending peaks. Financial Profile: 'aaa category' Fitch assesses Mugla's financial profile in the 'aaa' category. Tax revenues will drive operating revenue growth towards TRY19.1 billion, supported by expected real nominal GDP growth of 3.5% and average inflation of 21%. Under Fitch's rating case for 2025-2029, Mugla's operating balance will be about TRY7.3 billion with direct debt totalling TRY5.6 billion in 2029, leading to a strong debt payback ratio (net adjusted debt/operating balance) at 0.8x well below 5x, corresponding to the upper end of a 'aaa' financial profile. This is supported by its forecast solid actual debt service coverage of 6.7x in 2029 (2024: 591x), corresponding to a 'aaa' financial profile and despite an expected fall in the operating margin from a strong 56% average in 2020-2024 to 40% in 2025-2029. Mugla's leverage remains the lowest among its peers, with a fiscal debt burden (net adjusted debt to operating revenue) well below 50%, in line with a 'aaa' financial profile. Derivation Summary Mugla's 'bbb+' SCP results from a 'Weaker' risk profile and a 'aaa' financial profile. The SCP also factors in Mugla's comparison with national and international peers in the same rating category. Mugla's IDRs are not affected by any other rating factors but are capped by the Turkish sovereign IDRs. Mugla's national peers all have 'Weaker' risk profiles, and their SCPs primarily vary based on their leverage metrics. Mugla's SCP is at the high end of the 'bbb' category, supported by a strong payback ratio at 0.8x and an actual debt service coverage ratio at 6.7x, both in the 'aaa' category. Mugla also has a strong payback ratio similar to international peers such as the City of Almaty (Kazakhstan) and the State of Parana (Brazil). Its SCP is in line with City of Almaty (BBB/Stable, bbb+ SCP) and above that of State of Parana (BB/Stable; bbb SCP) and Ankara Metropolitan Municipality (BB-/Stable; bbb SCP), mainly based on its stronger debt coverage and payback ratio in the upper end of the 'aaa' category. Short-Term Ratings The 'B' Short-Term IDR is the only option for a 'BB-' Long-Term IDR. National Ratings Mugla's National Ratings are driven by its Long-Term Local-Currency IDR, which is mapped to the highest level of 'AAA(tur)' on the Turkish National Rating Correspondence Table based on peer comparison. The Outlook is Stable. Key Assumptions Qualitative Assumptions: Risk Profile: 'Weaker' Revenue Robustness: 'Midrange' Revenue Adjustability: 'Weaker' Expenditure Sustainability: 'Weaker' Expenditure Adjustability: 'Midrange' Liabilities and Liquidity Robustness: 'Midrange' Liabilities and Liquidity Flexibility: 'Weaker' Financial Profile: 'aaa' Asymmetric Risk: 'N/A' Support (Budget Loans): 'N/A' Support (Ad Hoc): 'N/A' Rating Cap (LT IDR): 'BB-' Rating Cap (LT LC IDR) 'BB-' Rating Floor: 'N/A' Quantitative assumptions - Issuer Specific Fitch's through-the-cycle rating case incorporates a combination of revenue, cost and financial risk stresses. It is based on 2020-2024 published figures and its expectations for 2025-2029: - Operating revenues CAGR of 23.3% in 2025-2029 (59.6% year on year for 2020-2024) due to expected high but declining nominal GDP growth of about 18% on average in 2025-2029 - Tax revenue CAGR of 23.7% in 2025-2029 (62.5% in 2020-2024) - Current transfers CAGR of 22.6% in in 2025-2029 (61.3% in 2020-2024) - Opex of CAGR of 26.3% in 2025-2029 (61.2% year on year for 2020-2024) due to expected high but declining inflation of about 21% on average in 2025-2029 - Negative net capital balance of TRY7.6 billion in 2025-2029 - Apparent cost of debt on average 14.1%, above the average cost of debt in 2024 based on the increased borrowing rates - Average USD/TRY assumptions based on Fitch's sovereign estimate for 2025 at USD/TRY43, 2026 at USD/TRY48, 2027 at USD/TRY53 and with an annual additional depreciation of 10% for 2028-2029 Issuer Profile Mugla is in south-western Turkiye with a population of 1.1 million, or 1.3% of the national population. Its population increases during summer. Mugla's local economy is dominated by the services sector (66%), largely driven by tourism, followed by industry (21%) and agriculture (13%). Its GDP per capita of TRY326,869 exceeded the national average of TRY311,110 in 2023, in line with pre-pandemic. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A downgrade of Turkiye's sovereign IDRs or a downward revision of Mugla's SCP resulting from debt payback of more than 9x on a sustained basis would lead to a downgrade of the IDRs. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade An upgrade of Turkiye's sovereign IDRs would lead to similar rating action on Mugla's IDRs, provided it maintains its debt payback ratio below 5x under Fitch's rating case. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Discussion Note Committee date: 08 July 2025 There was an appropriate quorum at the committee and the members confirmed that they were free from recusal. It was agreed that the data was sufficiently robust relative to its materiality. During the committee no material issues were raised that were not in the original committee package. The main rating factors under the relevant criteria were discussed by the committee members. The rating decision as discussed in this rating action commentary reflects the committee discussion. Public Ratings with Credit Linkage to other ratings Mugla's IDRs are capped by Turkiye's IDRs. Entity/Debt Rating Prior ----------- ------ ----- Mugla Metropolitan Municipality LT IDR BB- Affirmed BB- ST IDR B Affirmed B LC LT IDR BB- Affirmed BB- Natl LT AAA(tur) Affirmed AAA(tur) ODEA BANK: Fitch Affirms 'BB-' Long-Term IDR, Outlook Stable ------------------------------------------------------------ Fitch Ratings has affirmed Odea Bank A.S.'s (Odea) Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) and Local-Currency (LTLC) IDR at 'BB-'. The Outlooks on the IDRs are Stable. At the same time, Fitch has affirmed Odea's Viability Rating (VR) at 'b-'. Fitch has also upgraded the bank's subordinated debt rating to 'B', from 'CCC'. The upgrade of the subordinated debt rating reflects its assessment of the likelihood of potential extraordinary support flowing through to the bank's subordinated noteholders. Key Rating Drivers Support-Driven IDRs: Odea's IDRs are driven by potential shareholder support from its parent Abu Dhabi Developmental Holding Company PJSC (ADQ; AA/Stable), as reflected in its Shareholder Support Rating (SSR). However, its LTFC IDR is constrained by Turkiye's Country Ceiling of 'BB-', while its LTLC IDR also considers country risks. The Stable Outlooks mirror that on the sovereign. Odea's 'b-' VR reflects its limited franchise and weak operating profit, the bank's reasonable funding and liquidity profile and improved capitalisation that considers ordinary support from its parent. SSR Constrained: Odea's 'bb-' SSR considers potential support from ADQ, its 96% owner, primarily reflecting its record of support and reputational risks for the parent. ADQ's ratings are equalised with those of Abu Dhabi, given its important policy role as a holding company of major strategic assets. The SSR is constrained by Turkiye's Country Ceiling of 'BB-'. Improving but Challenging Operating Environment: The normalisation of monetary policy in Turkiye has reduced macrofinancial stability risks and external financing pressures. However, political developments have led to increased financial market volatility, which, if sustained, could disrupt disinflation and economic rebalancing. Banks remain exposed to high inflation, potential further Turkish lira depreciation, slowing economic expansion and multiple macroprudential regulations, despite simplification efforts. Limited Franchise: Odea's market shares of sector assets, deposits and loans were below 1% at end-1Q25, which results in very limited competitive advantages. The bank's restricted access to capital and wholesale funding under its previous ownership limits its operating profit generation, which is expected to improve under the new shareholding structure. Thin Capital, Ordinary Support: Odea's common equity Tier 1 (CET1) ratio decreased to 4.8% at end-1Q25 (4.0% excluding forbearance) due to continued bottom-line losses. The Tier 1 ratio has improved to 9.1% (including forbearance) on the back of a USD52.1 million capital injection by shareholders in May 2025 that will be reflected in core capital in 1H25. The planned additional Tier 1 issuance of USD100 million is expected to provide about an 800 basis point uplift to the Tier 1 and capital adequacy ratios. Fitch expects the CET1 ratio to improve with the inclusion of the capital injection, before decreasing towards end-2025, while remaining above the regulatory minimum including capital conservation buffers (7%). Weakened Profitability: Odea reported operating losses in 2024 (3.5% of RWAs) and 1Q25 (4.5% of RWAs), mainly due to tight margins on the rising cost of deposit funding and slow asset repricing. Fitch expects the bank to make an operating loss for the full year in 2025, and profitability to improve although remain weak in 2026. It remains sensitive to asset quality weakening and potential macro and regulatory developments. Growth Picking Up: Odea's loan book expansion was moderate at 6.3% on an FX-adjusted basis in 1Q25 (sector: 6.5%), following periods of de-risking and shrinking loan book (on an FX-adjusted basis) due to limited capital that had restricted growth. Credit risks remain due to high FC lending (end-1Q25: 63% of gross loans), Stage 2 loans (26% of gross loans), concentration risk and slowing economic growth. Improving Asset Quality: Odea's non-performing loans (NPL) ratio improved to 3.4% at end-1Q25 (end-2024: 3.8%), supported by tighter underwriting standards, collections, growth and low NPL inflows. Specific NPL coverage was moderate at 75% (sector: 76%), while total coverage was high at 218% (sector: 169%). Fitch expects the impaired loans/gross loans ratio to improve to about 3.2% at end-2025 and to 3% at end-2026, on the back of loan growth picking up and the bank's limited exposure to unsecured retail and SME lending. Mainly Deposit Funded: Odea is mainly customer-deposit funded (end-1Q25: 72% of non-equity funding). The bank's loans/deposits of 62% was below the sector average, but the share of FC deposits remains high (51%) and an additional 2% was in FX-protected lira deposits. FC wholesale funding (18% of total funding) largely comprises subordinated debt due in 2027 and short-term repo funding. Fitch expects FC wholesale funding to rise, as the bank will have improved access to external markets following its acquisition. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A downgrade of Turkiye's sovereign rating or an increase in its view of government intervention risk would lead to a downgrade of Odea's SSR, leading to negative rating action on its Long-Term IDRs. Odea's SSR is also sensitive to Fitch's view of the shareholder's ability and propensity to provide support. The VR could be downgraded following an erosion in the bank's capital buffers, for example, due to a big deterioration in asset quality or continued weak earnings performance. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade A positive change in Turkiye's LT IDRs would likely lead to a similar action on Odea's SSR and LT IDRs. An upward revision of the country ceiling could also lead to an upgrade of the bank's SSR and LT IDRs. Odea's VR could be upgraded if the bank's business profile and earnings performance materially improve, while maintaining stable asset quality metrics, adequate capitalisation ratios and a reasonable risk profile. OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS Odea's subordinated notes are rated two notches below its LTFC IDR anchor rating to reflect their subordinated status and Fitch's view of a high likelihood of poor recoveries in a default. The notching for the subordinated notes' rating includes two notches for loss severity and zero notches for non-performance risk relative to the LTFC IDR anchor rating. The LTFC IDR is the anchor rating for the notes as extraordinary shareholder support would likely to flow through to the bank's subordinated noteholders. The Short-Term IDRs of 'B' are the only possible option mapping to the LT IDRs in the 'BB' category. Odea's National Rating is underpinned by shareholder support and is in line with foreign-owned peers. Odea's LTFC and LCFC IDRs (xgs) are driven by and in line with the bank's VR. The Short-Term FC and LC IDRs (xgs) are mapped to the bank's LTFC and LTLC IDRs (xgs). OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES Odea's subordinated notes' rating is primarily sensitive to a change in the LTFC IDR anchor rating and a revision in Fitch's assessment of loss severity and non-performance risk. The ST IDRs are sensitive to changes in the bank's LT IDRs. The National Rating is sensitive to a change in the bank's LTLC IDR and a change in its creditworthiness relative to that of other Turkish issuers with a 'BB-' LTLC IDR. Odea's LT IDRs (xgs) are sensitive to changes in the bank's VR. The ST IDRs (xgs) are sensitive to changes in the bank's LT IDRs (xgs). VR ADJUSTMENTS The operating environment score of 'b+' for Turkish banks is lower than the category implied score of 'bbb', due to the following adjustment reason: macroeconomic stability (negative). Public Ratings with Credit Linkage to other ratings Odea's ratings are linked to those of ADQ. ESG Considerations Odea has an ESG Relevance Score for Management Strategy of '4', reflecting an increased regulatory burden on all Turkish banks. Management's ability across the sector to determine their own strategy and price risk is constrained by the regulatory burden and also by the operational challenges of implementing regulations at the bank level. This has a moderately negative impact on banks' credit profiles and is relevant to banks' ratings in combination with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Prior ----------- ------ ----- Odea Bank A.S. LT IDR BB- Affirmed BB- ST IDR B Affirmed B LC LT IDR BB- Affirmed BB- LC ST IDR B Affirmed B Natl LT AA(tur) Affirmed AA(tur) Viability b- Affirmed b- LT IDR (xgs) B-(xgs) Affirmed B-(xgs) Shareholder Support bb- Affirmed bb- ST IDR (xgs) B(xgs) Affirmed B(xgs) LC LT IDR (xgs) B-(xgs) Affirmed B-(xgs) LC ST IDR (xgs) B(xgs) Affirmed B(xgs) Subordinated LT B Upgrade CCC TURKLAND BANK: Fitch Affirms 'B' Long-Term IDR, Outlook Stable -------------------------------------------------------------- Fitch Ratings has affirmed Turkland Bank A.S.'s (T-Bank) Long-Term Foreign-Currency (LTFC) and Local-Currency (LTLC) Issuer Default Ratings (IDRs) at 'B'. The Outlooks are Stable. Fitch has also affirmed the bank's Shareholder Support Rating (SSR) at 'b' and the bank's Viability Rating (VR) at 'b-'. Key Rating Drivers Support Driven: T-Bank's LT IDRs are driven by potential support from Arab Bank Plc (AB; 'BB'/Stable), its Jordan-based 50% owner, as reflected by its SSR. The Stable Outlooks on the IDRs mirror those on AB. T-Bank's 'b-' VR reflects its small size and limited franchise, improving but still below-sector asset quality, loans and deposit concentrations, volatile profitability and still weak, but improved, capitalisation. SSR Reflects Limited Importance: T-Bank's SSR considers its 50% ownership by AB, but also its limited role within the group as Fitch views Turkiye as a non-core market for AB. It also reflects AB's classification of T-Bank as an investment held for sale in its financial statements, which indicates a high potential for disposal, and limits reputational risk for AB, thereby reducing its propensity to support T-Bank. Improving but Challenging Operating Environment: The normalisation of monetary policy in Turkiye has reduced near-term macro and financial stability risks and external financing pressures. However, political developments have led to increased financial market volatility, which, if sustained, could disrupt disinflation and economic rebalancing. Banks remain exposed to high inflation, potential further Turkish lira depreciation, slowing economic growth and multiple macroprudential regulations, despite simplification efforts. Limited Franchise: T-Bank has a limited domestic franchise (end-1Q25: 0.05% market share of banking sector assets) resulting in limited pricing power. Lending is concentrated in the corporate and commercial customer segment, largely through short-term lending. Impaired Loans Decreasing: T-Bank's impaired (Stage 3) loans ratio decreased to 3.6% at end-1Q25, from 5.3% at end-2024 on a drop in non-performing loans from collections and a strong nominal loan growth (1Q25: 37.7%) but remains above the sector average (end-1Q25: 2.0%), reflecting the bank's legacy asset quality, despite a material fall in impaired loans. Fitch expects the ratio to be about 4% by end-2025, given slowing growth and high interest rates. Total loan loss allowances coverage of impaired loans (end-1Q25: 54%) reflects reliance on collateral. Asset quality risks stem from high loan concentrations, FC lending (end-1Q25: 30% of gross loans; sector: 38%), slowing economic growth and high lira interest rates. Volatile Profitability: T-Bank's operating profit fell to 3.3% of risk-weighted assets (RWAs) in 1Q25, from 6.4% in 2024. Operating profitability reflects provision reversals (1Q25: 52% of operating profit; 2024: 69%) and high operating costs. The bank has been recording positive pre-impairment operating profits since 2022, although it has been volatile. Profitability is sensitive to the regulatory environment. Fitch expects operating profit of about 2% of RWAs for 2025 alongside a possible fall in interest rates and continued inflation-led pressure on operating costs. Pressure On Capital Decreasing: T-Bank's common equity Tier 1 (CET1) ratio decreased to 16.0% at end-1Q24 (15.7% net of forbearance), from 20.5% at end-2024, largely due to credit growth and tightened forbearance on FC RWA. Fitch expects the CET1 ratio to be around 14% at end-2025 due to reduced internal capital generation. Risks to capitalisation through unreserved impaired loans has reduced (end-1Q25: 12.6% of CET1; end-2023: 18%; end-2022: 57%; end-2021: 91%) but remain high. Capitalisation is sensitive to lira depreciation, internal capital generation, asset-quality risks and growth. Mainly Deposit Funded; High Share of FC Deposits: T-Bank is almost entirely funded by customer deposits. The deposit base is concentrated and the share of FC deposits is high (end-1Q24: 55% of customer deposits; sector: 38%) creating risks. Fitch expects loans/deposits to be around 75% at end-2025 on sustained strong loan growth. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade T-Bank's IDRs are primarily sensitive to changes in its SSR, which is sensitive to an adverse change in its view of AB's ability and propensity to provide support. A multi-notch downgrade of Turkiye's sovereign rating would lead to a downgrade of T-Bank's SSR and, consequently, its LT IDRs. T-Bank's VR could be downgraded due to an erosion of the capital buffer, for instance, through significant deterioration of asset quality and profitability, or a weakening of its FC liquidity position, if not offset by ordinary shareholder support. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade An upgrade of the bank's IDRs is unlikely as the bank is classified as an investment held for sale by AB. A VR upgrade could stem from a significant improvement in asset quality that reduces risks to capitalisation, alongside a longer record of improved sustainable profitability and a strengthening of the bank's business profile. OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS T-Bank's National Rating is underpinned by shareholder support at 'BBB+(tur)' and reflects T-Bank's creditworthiness in LC relative to other Turkish issuers. The Short-Term IDRs of 'B' are the only possible option mapping to LT IDRs in the 'B' category. OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES The National Rating is sensitive to changes in T-Bank's LTLC IDR, and its creditworthiness relative to that of other Turkish issuers'. The Short-Term IDRs are sensitive to multi- notch changes in the LT IDRs. VR ADJUSTMENTS The operating environment score of 'b+' for Turkish banks is below the 'bbb' category implied score due to the following adjustment reason: macroeconomic volatility (negative), which reflects market volatility, high dollarisation and high risk of FX movements in Turkiye. Public Ratings with Credit Linkage to other ratings T-Bank's IDRs are linked to the ratings of AB. ESG Considerations T- Bank'sESG Relevance Score for Management Strategy of '4' reflects an increased regulatory burden on all Turkish banks. Management ability across the sector to determine their own strategy and price risk is constrained by regulatory burden and also by the operational challenges of implementing regulations at the bank level. This has a moderately negative impact on T- Bank's credit profile and is relevant to the ratings in combination with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Prior ----------- ------ ----- Turkland Bank A.S. LT IDR B Affirmed B ST IDR B Affirmed B LC LT IDR B Affirmed B LC ST IDR B Affirmed B Natl LT BBB+(tur) Affirmed BBB+(tur) Viability b- Affirmed b- Shareholder Support b Affirmed b =========================== U N I T E D K I N G D O M =========================== COORDINATE SAAS: Begbies Traynor Named as Administrators -------------------------------------------------------- Coordinate Saas Limited was placed into administration proceedings in the High Court of Justice Business and Property Courts in Leeds, Insolvency and Companies List (ChD), Court Number: CR-2025-LDS-000639, and Robert Alexander Henry Maxwell and Julian N R Pitts of Begbies Traynor (Central) LLP were appointed as administrators on July 3, 2025. Coordinate Saas specialized in software publishing. Its registered office is at C4di @ The Dock, 31-38 Queen Street, Hull, HU1 1UU. The joint administrators can be reached at: Louise Longley Julian N R Pitts Begbies Traynor (Central) LLP Floor 2, 10 Wellington Place Leeds, LS1 4AP Any person who requires further information may contact Chloe Fletcher Begbies Traynor (Central) LLP Email: chloe.fletcher@btguk.com Tel No: 0113 209 1038 DOLFIN FINANCIAL: Oct. 27 Hearing Set for Client Money Distribution ------------------------------------------------------------------- IN THE HIGH COURT OF JUSTICE BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES INSOLVENCY AND COMPANIES LIST (ChD) IN THE MATTER OF DOLFIN FINANCIAL (UK) LTD (COMPANY NUMBER 07431519) (IN SPECIAL ADMINISTRATION) AND IN THE MATTER OF THE INVESTMENT BANK SPECIAL ADMINISTRATION REGULATIONS 20111 NOTICE OF HEARING On June 30 2021, Dolfin Financial (UK) Limited was placed into special administration pursuant to Regulation 7 of the Investment Bank Special Administration Regulations. Adam Henry Stephens and Kevin Ley of S&W Partners LLP were appointed as the Company's Special Administrators. On January 17, 2025, Firestone Financial Assets Ltd applied to the High Court in London seeking a direction that the JSAs make an interim distribution of Client Money and relief under paragraph 74(2) of Schedule BI of the Insolvency Act 1986 (as applied by Regulation 15(4) of the IBSARs) ("the Firestone Directions Application"). On March 26, 2025, Firestone issued a further application pursuant to Rule 202 of the Investment Bank Special Administration (England and Wales) Rules 2011 seeking the following relief: (i) to reduce the amount of remuneration which the JSAs are entitled to charge; and/or (ii) to fix the basis of the JSAs' remuneration at a reduced rate of amount; and/or (iii) to change the basis of the JSAs' remuneration (the "Firestone Rule 202 Application"), which was served on the Joint Special Administrators on May 27, 2025. On April 28, 2025, the JSAs applied to the High Court in London for directions under paragraph 63 of Schedule BI of the IA 1986 (as applied by Regulation 15(4) of the IBSARs) regarding the future conduct of the Special Administration which will affect the distribution of Client Money and other Client Assets held for Clients by the Company (the "JSAs' Directions Application"). On May 2, 2025, ICC judge Prentis ordered that the JSAs' Directions Application and the Firestone Directions Application be listed for directions at the procedural hearing which took place, on June 10, 2025. The Firestone Rule 202 Application was also subsequently listed for directions at the Procedural Hearing. At the Procedural Hearing, Judge Nicola Rushton KC ordered that the JSAs' Directions Application, the Firestone Directions Application and the Firestone Rule 202 Application be case managed and heard together in the week commencing October 27, 2025, with a time estimate of 3 days before a High Court judge of the Business and Property Court {Chancery Division) at The Rolls Building, 7 Rolls Buildings, Fetter Lane, London, EC4A INL, United Kingdom. Copies of the respective Application Notices, and the June 10 Order, are available for clients and creditors of the Company to review and/or download from the following website: https://www.swgroup.com/services/ restructuring-and-recovery-services/dolfin-financial-uk-ltd-in-special-administration/ Copies of the evidence filed in support of the Applications will be made available, upon request, in a password-protected SharePoint folder. Requests for access to the Folder must be made to the JSAs in writing, at dolfin@@swgroup.com, setting out the capacity in which the request is made. Any client or creditor of the Company who intends to appear at the Hearing must file and serve, by September 8, 2025: (a) any evidence in response to the JSAs' Directions Application, and (b) any further evidence in support of or in response to the Firestone Rule 202 Application (such evidence to be limited to the issue of standing/permission). Any client or creditor of the Company who intends to appear at the Hearing must give notice to the JSAs by telephone on +44 20 4617 5828 or by email at Nichola.Burns(@swgroup.com or Jack.McGinley@swgroup.com by no later than 28 days prior to the date of the Hearing. Any client or creditor of the Company who has given Notice must file and exchange Skeleton Arguments, with the JSAs and Firestone (and any other party who has given Notice), not less than 2 clear days before the date fixed the Hearing. PREFERRED RESIDENTIAL: Fitch Affirms 'B-sf' Rating on Cl. E1c Notes ------------------------------------------------------------------- Fitch Ratings has affirmed Preferred Residential Securities 05-2 PLC (PRS 05-2) and Preferred Residential Securities 06-1 PLC (PRS 06-1). Fitch has also revised the Outlook on PRS 05-2's D1c note to Negative from Stable, with a Stable Outlook on all other notes. The agency has removed all tranches from Under Criteria Observation. Entity/Debt Rating Prior ----------- ------ ----- Preferred Residential Securities 06-1 PLC Class C1a 74038YAK2 LT AAAsf Affirmed AAAsf Class C1c 74038YAM8 LT AAAsf Affirmed AAAsf Class D1a 74038YAN6 LT A+sf Affirmed A+sf Class D1c 74038YAQ9 LT A+sf Affirmed A+sf Class E1c 74038YAS5 LT B-sf Affirmed B-sf Preferred Residential Securities 05-2 PLC Class C1a 740377AK2 LT AAAsf Affirmed AAAsf Class C1c 740377AM8 LT AAAsf Affirmed AAAsf Class D1c 740377AQ9 LT A+sf Affirmed A+sf Class E1c 740377AS5 LT B-sf Affirmed B-sf Transaction Summary The transactions are securitisations of seasoned non-conforming residential mortgage loans originated by Preferred Mortgages Limited. The loans are buy-to-let and non-conforming owner-occupied. KEY RATING DRIVERS UK RMBS Rating Criteria Updated: The rating actions reflect Fitch's updated UK RMBS Rating Criteria (see "Fitch Ratings Updates UK RMBS Rating Criteria" dated 23 May 2025). Key changes include updated representative pool weighted average foreclosure frequencies (WAFFs), changes to sector selection, revised recovery rate assumptions and changes to cashflow assumptions. The non-conforming sector representative 'Bsf' WAFF has had the most significant revision. Fitch applies newly introduced borrower-level recovery rate caps to underperforming seasoned collateral, for owner-occupied and buy-to-let sub-portfolios in this case. Fitch now applies dynamic default distributions and high prepayment rate assumptions rather than the previous static assumptions. Tail Risks Could Lead to Downgrades: The Outlook on the D1c note for PRS 05-2 reflects the downside risks faced by the sector. Fitch expects arrears concentration for both pools to increase over time leading to performance volatility. Both transactions are sufficiently granular to support up to 'AAAsf' note ratings despite diminishing loan counts. The outstanding proportion of interest-only loans past stated maturity rose to 5.5% from 2.6% for PRS 05-2 and to 3.6% from 2.4% for PRS 06-1. Fitch stressed modelled default rates and recovery timing to account for these risks. Fitch found the D1c note ratings of PRS 05-2 susceptible to downgrade pressure in these scenarios. Transaction senior fixed fees remain high but overall are decreasing. Fitch may raise its fixed-fee assumption if this trend reverses. This could lead to downgrade pressure on the mezzanine and junior note ratings. Worsening Delinquencies: Arrears greater than three months have risen for both transactions since the last review to 29.2% and 23.3% (26.2% and 20.4% in June 2024), for PRS 05-2 and PRS 06-1, respectively, driven by pool amortisation. The total number of loans in arrears has decreased since June 2024 for both transactions, suggesting some stabilisation in arrears. At this review Fitch has treated loans more than 12 months in arrears as defaulted, which has affected 13.8% and 9.8% of the total asset balance for PRS 05-2 and PRS 06-1 respectively. Increasing Credit Enhancement: The transactions amortise sequentially due to a breach of a trigger related to arrears levels, resulting in a build-up in credit enhancement (CE) for all classes of collateralised notes. Both transactions benefit from non-amortising reserve funds that also contribute to the build-up of CE. This has supported the rating affirmations. Recovery Rate Cap: The transaction's reported losses exceed those expected based on the indexed value of the properties in the pool. Fitch has applied borrower-level recovery rate (RR) caps to the owner-occupied and buy-to-let loans in the transactions, where the RR cap is 85% at 'Bsf' and 65% at 'AAAsf'. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade The transactions' performance may be affected by adverse changes in market conditions and the economic environment. Weakening economic performance is strongly correlated to increasing delinquencies and defaults and could reduce CE available to the notes. Fitch found that a 15% increase in the WAFF and 15% decrease of the weighted average recovery rate (WARR) would imply the following for PRS 05-2: Class C1a/C1c: 'AAAsf' Class D1c: 'BBB-sf' Class E1c: Below 'CCCsf' Fitch found that a 15% increase in the WAFF and 15% decrease of the WARR would imply the following for PRS 06-1: Class C1a/C1c: 'AAAsf' Class D1a/D1c: 'A-sf' Class E1c: Below 'CCCsf' Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Stable to improved asset performance driven by stable delinquencies and defaults would lead to increasing CE and potentially upgrades. Fitch found that a 15% decrease in the WAFF and 15% increase of the WARR would result in the following for PRS 05-2: Class C1a/C1c: 'AAAsf' Class D1c: 'A+sf' Class E1c: 'B-sf' Fitch found that a 15% decrease in the WAFF and 15% increase of the WARR would imply the following for PRS 06-1: Class C1a/C1c: 'AAAsf' Class D1a/D1c: 'AA+sf' Class E1c: 'Bsf' USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pools and the transactions. Fitch has not reviewed the results of any third-party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. Fitch did not undertake a review of the information provided about the underlying asset pools ahead of the transactions' initial closing. The subsequent performance of the transactions over the years is consistent with the agency's expectations given the operating environment and Fitch is therefore satisfied that the asset pool information relied on for its initial rating analysis was adequately reliable. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied on for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG Considerations PRS 05-2 and PRS 06-2 have an ESG Relevance Score of '4' for Customer Welfare - Fair Messaging, Privacy & Data Security due to a material concentration of interest-only loans, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. PRS 05-2 and PRS 06-2 have an ESG Relevance Score of '4' for Human Rights, Community Relations, Access & Affordability due to the underlying asset pools containing limited affordability checks and self-certified income, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. R.E. DICKIE: FRP Advisory Named as Administrators ------------------------------------------------- R.E. Dickie Limited was placed into administration proceedings in the High Court of Justice Business and Property Courts in the High Court of Justice The Business & Property Courts in Leeds, Insolvency and Companies List (ChD), Court Number: CR-2025-LDS-000657, and Tom Bowes and Anthony Collier of FRP Advisory Trading Limited were appointed as administrators on July 1, 2025. R.E. Dickie engaged in the preparation and spinning of textile fibres. Its registered office is c/o FRP Advisory Trading Limited, 4th Floor, Abbey House, 32 Booth Street, Manchester, M2 4AB Its principal trading address is at West End Works, Parkinson Lane, Halifax, HX1 3UW The joint administrators can be reached at: Tom Bowes Richard Goodall FRP Advisory Trading Limited 4th Floor, Abbey House 32 Booth Street Manchester M2 4AB For further information, contact: The Joint Administrators Tel No: 0161 833 3344 Alternative contact: Ellie Clark Email: cp.manchester@frpadvisory.com ZENITH INTERNATIONAL: August 30 Claims Filing Deadline Set ---------------------------------------------------------- Any former investor in Zenith International Bond Funds Limited (originally known as Old Court International Bond Fund Limited and formerly known as Five Arrows International Bond Funds Limited and Insight Investment International Bond Funds Limited) which was dissolved on February 21, 2014, who believes they have an unredeemed interest in the Fund should make a claim to the Trustee by no later than August 30, 2025. Claims may be made by writing to-the Trustee. Please note that with effect from the Closing Date, the Trustee shall proceed to administer the Trust in accordance with its provisions having regard only to the claims of which it has prior notice. The Trustee will require claimants to provide requisite due diligence and supporting documents or additional information before it is able to process any claim received. Investors who have received written communication from the Trustee before the date of this notice do not need to respond. The Trustee's address for claims is R&H Trust Co (Guernsey) Ltd as Trustee of The Zenith International Bond Funds Limited Unclaimed Redemption Proceeds, PO Box 187, Trafalgar Court, Les Banques, St Peter Port, Guernsey, GY1 4HR. The Fund's registered office address is Regency Court, Glategny Esplanade, St Peter Port, GUERNSEY GY1 1WW. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2025. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$775 per half-year, delivered via e-mail. 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